Notwithstanding prices of coking coal projected to fall further into 2012, Australia's BHP Billiton Ltd. together with Mitsubishi Corp. of Japan has approved a $4.2 billion expansion deal for two coal projects in central Queensland.

The two companies will contribute equal funds, $2.1 billion each, to the development of the Caval Ridge mine and expansion of the Peak Downs mine located in the northern Bowen Basin in Central Queensland.

BHP Billiton Ltd. said the two projects are expected to add an extra 8 million tonnes to annual output, 5.5 million tonnes at Caval Ridge and 2.5 million tonnes from Peak Downs, with an expectation of a rapid, low-cost expansion to 10 million tonnes per year. The figures will further boost BHP Billiton Ltd.'s objective to increase production of metallurgical coal by 80 per cent before end of the decade.

First production output is expected in 2014. The initial project's resource life is expected to be greater than 60 years, BHP Billiton Ltd. said.

"This is a continuation of BHP Billiton's strategy of investing in large, low cost, expandable mines with long lives," BHP Billiton metallurgical coal president Hubie van Dalsen said.

Quarterly reset prices of coking coal have dropped from record amounts of $330 a tonne earlier this year when floods from Queensland restricted supply. It has declined to $280 a tonne at present.

BHP Billiton Ltd. made $4.7 billion in earnings before interest and tax in 2010-11, by 80 per cent between now and 2020. It produces about 37 million tonnes a year of coking coal from Queensland and the Illawarra in NSW. BHP Billiton Ltd. has plans to enlarge output to a further 68 million tonnes.

BHP Billiton Ltd. is also aiming to expand the Saraji East and Goonyella mine in Queensland, as well as its private Hay Point coal terminal at Mackay.

Apart from the expansion projects, BHP Billiton Ltd. is also mulling building its own railway to help haul its own coal in Queensland. It presently utilized QR National's track and haulage operations.