The West Australian reported that BHP Billiton has chopped USD 400 million off its Pilbara expansion budget cutting back plans for a new blending and rail stockyard at Port Hedland.

The savings offset a blowout at BHP's Jimblebar iron ore mine which is under construction. The blowout will add USD 340 million to the expenditure line on BHP's financial report despite the project being ahead of schedule and on budget in Australian dollar terms.

BHP which reports in US dollars said that it now expected the 35 million tonne per annum Jimblebar mine to cost USD 3.64 billion to build. In June, BHP sold 15% stake in the mine to long term partners ITOCHU Corporation and Mitsui for USD 1.5 billion which included consideration for a share of capital costs.

BHP said that the south stockyard at Nelson Point at Port Hedland was no longer included in the scope of its port blending and rail yard facilities project. Although it was on track to hit its target 220mtpa export capacity by the end of the year ahead of schedule, it was unclear whether the stockyard pull-back would undermine plans to remove bottlenecks that would deliver an extra 20mtpa of exports.

BHP's June quarter production beat analysts expectations, with its Pilbara mines yielding 45 MT of BHP iron ore, and its global operations 47.7 MT well ahead of consensus estimates of 43.2 MT. Its Pilbara port and rail operations ran at a 217 million tonne per annum rate in the past three months.