Mine Development Approval

Broken Hill Proprietary Co Ld
17 October 2000


BHP APPROVES SAN JUAN UNDERGROUND DEVELOPMENT

The Broken Hill Proprietary Company Limited (BHP) today announced approval for
the development of an underground longwall mine at their San Juan thermal coal
operations in New Mexico, United States.

The mine will replace production from two of BHP's three existing surface
mines (San Juan & La Plata) and will be the sole coal source for the adjacent
San Juan Generating Station.

The project represents a high value brownfield development that is consistent
with BHP's strategy to extract maximum value from its existing assets.

President BHP Coal, Mike Oppenheimer, said the project would ensure the San Juan
coal operations continue to operate profitably well into the future.

'The underground development will assure the viability of the San Juan coal
assets by significantly reducing the cost of coal supplied to our customer, the
San Juan Generating Station.'

'Rising surface mining costs are threatening their competitiveness in the
increasingly deregulated Western US power market.'

Capital expenditure is estimated at US$148 million (A$245 million).

Development will commence immediately with full production expected in late 2002
after a two year construction period. Annual production will be 6.5 million
short tons (5.9 million metric tonnes).

BHP's New Mexico Coal assets, the San Juan and Navajo Coal Companies, are
surface mining operations dedicated to the exclusive supply of coal to their
power generation customers. The supply is covered by long term contracts.


Contact:

Investor Relations
Andrew Nairn
Senior Business Analyst
Phone: [phone]
Mobile: [phone]


Media Relations
Mandy Frostick
Manager Media Relations
Phone: [phone]
Mobile: [phone]



San Juan Underground Mine

October 2000

Summary

-   BHP has approved the development of an underground longwall mine at the San
Juan thermal coal operations in New Mexico, United States.  The mine will
replace production from two of BHP's three existing surface mines (San Juan & La
Plata) and will be the sole coal source for the adjacent electric power utility
customer, the San Juan Generating Station (SJGS).

-   The project represents a high value brownfield development that will enable
BHP to continue to extract maximum value from its thermal coal assets in New
Mexico.

-   Rising surface mining costs caused by deepening coal seams threaten the
competitiveness of the SJGS in the increasingly deregulated Western US power
market. The new underground mine will significantly reduce the cost of coal
supplied to the SJGS, thereby ensuring the longer term viability of the mutually
dependant businesses.

-   The underground development enhances the longer term profit and cashflow
generation of the mines.  The terms of the Coal Sales Agreement, governing the
relationship between San Juan Coal Company and the power station, provide a long
term, low risk project from a financial perspective.

-   Capital expenditure is estimated at US$148 million (A$245 million), with
full production expected in late 2002 after a two year construction period.

-   The development of the project included an extensive risk identification and
assessment program, including the operation of a pilot mine to analyse actual
mining conditions and any associated technical risks.  The results of this
program influenced the mine plan layout and plans have been developed to
eliminate or mitigate identified risks to ensure successful project delivery.


Strategic context

The San Juan underground project represents a high value brownfield development
that will ensure BHP continues to extract maximum value from its thermal coal
assets in New Mexico.

The San Juan Coal Company operates in a niche due to its relative location to
and agreement with the San Juan Generating Station.  This has allowed the coal 
operations to be profitable in the past.  For this relationship to successfully
continue production must be at a lower cost.  The underground project sustains
the competitiveness of the San Juan Generating Station and therefore assures the
viability of the San Juan coal assets.

The US power market is undergoing significant change.  Electricity deregulation,
volatile petroleum and gas prices and power shortages (particularly in the
Southwestern USA), potentially create opportunities
for Western US coal producers.

BHP will be exploiting opportunities in the Western US which have the potential
to deliver material value creating growth.


History

BHP owns and operates three open-cut thermal coal mines in New Mexico, United
States through its 100% ownership of Navajo Coal Company and San Juan Coal 
Company. Production from these mines is sold to nearby power generation
facilities under long term contracts.

San Juan Coal Company provides the San Juan Generating Station with
approximately 6.5 million tons per annum from the adjacent San Juan and La Plata
mines.  Navajo Coal Company provides the Four Corners Power Plant with around
8.5 million tons per annum from the Navajo mine.

The San Juan mine commenced production in 1974.  The La Plata mine, located 35
kilometres north east of San Juan, began production in August 1986.


Financial Contribution

The New Mexico Coal operations make a robust contribution to BHP's financial 
results.  In fiscal 2000, this contribution accounted  for approximately 8% of
the Minerals group's total earnings.


Existing Coal Sales Agreement

The relationship between San Juan Coal Company and the San Juan Generating
Station is governed by a 'Coal Sales Agreement' which provides for the supply of
coal until 2017.  The price payable under the contract is determined on a
monthly basis by a formula that includes partial reimbursement of operating
costs, and a return on capital invested.


Rationale for underground development

Future surface mine operating costs are projected to increase further from  1999
levels due to deepening coal reserves.  This reduces the ability of the
generating station to remain competitive in a deregulated electricity market.
Approximately 80% of the San Juan Generating Station operating cost to produce
electricity is attributable to the cost of coal.  Significant investment in 
stripping capacity would also be required to maintain the current production
levels

Several development options were considered to ensure a long-term, lower cost
fuel supply to the power plant.  These included; developing a new mine on the
Navajo lease to feed both power plants, expansion of Navajo, expansion of La
Plata onto the adjacent Southern Ute Indian Reservation as well as various
underground scenarios.

Lower operating costs and superior coal quality resulted in the development of
the San Juan underground being the preferred alternative.

The Coal Sales Agreement was re-negotiated in September 2000 to allow for the
underground development.  The terms ensure a substantial degree of the
underground project risk is to be shared with the utility customer.


Development Plan

The underground mine will be an extension of the existing San Juan mine at an
estimated capital cost of US$148 million (A$245 million).  To maintain current
supply from the surface operations would require significant investment in
stripping equipment.

Development will commence immediately with longwall production expected to begin
in May 2002 and reach steady state (13,500 tons/8 hr shift) by November 2002.

Production capacity will meet average annual sales of 6.5 million tons through
to 2018.

The forecast life of mine direct cash operating cost compares favourably with
existing US longwall operations.

Note: ton = short ton = .907 metric tonnes


Contact details

Melbourne

Dr Robert Porter
Vice President Investor Relations

Phone: [phone]   Fax: [phone])

Mobile:  [phone]