BHP Billiton Ltd, the world’s biggest miner, has approved US$1.93bil in capital expenses to spruce up rail and port facilities as it steps up expansion of its Australian iron-ore business to feed rising demand from China’s steelmakers.

Analysts said the funds would cover about half the cost of lifting BHP’s annual output in Australia’s rich Pilbara iron belt by 17% to 240 million tonnes.

Iron ore has turned into a golden investment for anyone who can dig it up and get it on a ship, preferably bound for China, with the spot market price of ore nearly twice what it was a year ago.

Contract iron ore prices under negotiation with steel mills are forecast to rise 40% or more this year as steelmakers crank up mills. BHP sells about half its iron ore to China, where steel output is running at record rates. — Reuters