Approval of $4.8 billion in capital spending for RGP5 included previously approved capital of $930 million. The expansion will increase BHP Billiton’s installed capacity across its Western Australia Iron Operations by 50 million mt/y to 205 million mt/y (100% basis). The company’s attributable share is approximately 85%.

RGP5 is expected to deliver first production in the second half of 2011. The majority of production growth will come from the Yandi and Mining Area C operations. Significant infrastructure upgrades will include additional shipping berths at the Port Hedland inner harbor (Finucane Island), substantial double tracking of the company’s rail system, and additional crushing, screening and stockpiling facilities at Yandi.

BHP Billiton Chief Executive for ferrous and coal, Marcus Randolph, said that “while there is substantial uncertainty in the short-term outlook, this investment decision highlights BHP Billiton’s confidence that the long-term outlook remains positive. The expansion also underscores our belief that high-quality West Australian iron ore, with close proximity to China and the Asian markets, is an important source of supply. With our strong balance sheet, we are well positioned to invest in high-quality and low-risk projects such as RGP5.”

Regarding the company’s decision to abandon its bid for Rio Tinto, BHP Billiton CEO Marius Koppers said, “We have previously said that similar cultures and the overlap of key assets and infrastructure make this a compelling combination. Recent global events and associated falls in commodity prices have, however, altered risk dimensions. BHP Billiton is very focused on balance-sheet strength. Accordingly, the greater debt exposure of the combination plus the difficulty of divesting assets have increased the risks to shareholder value to an unacceptable level.”

The BHP Billiton statement noted that the proposed acquisition had received clearance without requirements for remedies from the U.S. Dept. of Justice and the Australian Competition and Consumer Commission. However, the European Commission was expected to require divestments in iron ore and metallurgical coal.

“Given the current economic circumstances and uncertainty regarding our ability to achieve fair divestment values in the required time frames, these remedies would contribute to the cost and risk of the transaction. Against this background BHP Billiton will not offer any remedies to the European Commission antitrust authorities, and BHP Billiton expects that without remedies European Commission clearance will be withheld,” the statement said. The company intends to write off costs of about $450 million incurred in its pursuit of Rio Tinto.

Regarding Ravensthorpe and Yabulu, BHP Billiton said the $2.1-billion impairment charge resulted mainly from “the significant deterioration in the nickel market, which has seen a dramatic fall in demand, coupled with changes in the rate of production ramp up for Ravensthorpe and the projected sustaining capital expenditure. BHP Billiton will continue to review the operating performance and future value of both operations in accordance with normal practice.”