BHP has approved an initial funding of around A$244m ($184m) for the South Flank sustaining mine project in the central Pilbara, Western Australia.

South Flank project will expand the existing Mining Area C hub, and is the firm’s preferred option to replace production from the 80 Mtpa Yandi mine.

Yandi mine is expected to complete its economic life in the early-to-mid 2020s.

The company will use the initial funding to expand accommodation facilities, which will support current and future workforce requirements.

The capital cost for South Flank is expected to be around $30 to US$40 per tonne, said the company.

With first ore targeted to be mined in 2021, the South Flank project is expected to be submitted for board approval in the middle of the 2018.

According to BHP, the full development of South Flank project will generate several thousand jobs during construction.

BHP Australia minerals and operations president Mike Henry said: “As well as supporting our current operational requirements, this work will advance potential first ore from South Flank, while we further optimise the full development and progress external and internal approvals.

“As we have said previously, a continuing stable investment environment in Western Australia is required to underpin ongoing investment in the business, including this project.

“The capital efficiency of South Flank is underpinned by the planned use of existing infrastructure at the Mining Area C operation, which would, if approved, become one of the largest standalone iron ore processing centers in the world, within reach of several billion tonnes of high-grade ore."