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BHP Billiton Opens New Queensland Mine

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Mining giant, BHP Billiton Limited (BHP - Free Report) , recently opened the Daunia mine, the ninth operating metallurgical coal mine in central Queensland, Australia. The Daunia mine is founded as a 50-50 joint venture between BHP Billiton and Mitsubishi Development Pty Ltd., a wholly-owned mining subsidiary of Japan-based Mitsubishi Corporation (MSBHY - Free Report) .

The construction of the Daunia mine started in 2011 and was completed in July this year. The mine is capable of producing roughly 4.5 million tonnes of metallurgical coal per annum with a useful life of 30 years. Apart from the $1.4 billion invested in the mine, the joint venture has invested roughly $7.7 billion for major projects in Queensland over the past three years. Currently, the joint venture operates seven coal mines in the region, which will increase to eight next year, with the completion of the construction of Caval Ridge mine.

Queensland coal operations are a major contributor to the company’s revenues. BHP Billiton has various expansion plans on the anvil to tap the immense growth potential of the region. Another expansion plan in the region, Hay Point Stage Three Expansion project, is expected to start in 2015.

BHP Billiton’s share of metallurgical coal production reached 38 million tonnes in fiscal 2013, increasing 13.0% year over year. Metallurgical coal production for fiscal 2014 is expected to increase to approximately 41 million tonnes. However, with the start of Daunia mine and the scheduled commissioning of Caval Ridge mine, BHP Billiton’s total Queensland coal business capacity will increase to 66 million tonnes per annum by the end of 2014.

The new mine will also contribute to its corporate social responsibility with new jobs. As much as 450 jobs will be created with the start of the mine, with roughly 100 positions for female candidates. We believe such strategies from the company will not only improve its financial health but also enhance its credibility in the market.

BHP Billiton currently carries a Zacks Rank #3 (Hold). Other mining stocks that warrant a look include Denison Mines Corp. and US Energy Corp. . Both the companies carry a Zacks Rank #2 (Buy).

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