The BHP Group Ltd (ASX: BHP) share price is on course to record another decline today. This is despite the mining giant announcing the commencement of production at a new mine.
At the time of writing, the BHP share price is down over 1% to $48.18.
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Why is the BHP share price trading lower today?
Today's weakness in the BHP share price appears to have been driven by a softening iron ore price.
According to CommSec, the spot benchmark iron ore price fell by 3.7% or US$8.30 a tonne overnight to US$215.45 a tonne.
This is also weighing on the Rio Tinto Limited (ASX: RIO) share price. Its shares are down 1% at the time of writing.
What did BHP announce?
Failing to keep the BHP share price in positive territory today was the announcement of the achievement of first ore at the US$3.6 billion South Flank mine in the central Pilbara, Western Australia.
According to the release, South Flank is an 80 Mtpa sustaining mine, and will be the most technically advanced high quality iron ore mine in Western Australia.
Together with the existing Mining Area C, it will form the largest operating iron ore hub in the world. This hub is expected to produce 145 million tonnes of iron ore each year.
BHP's President of Minerals Australia, Edgar Basto, commented: "South Flank is Australia's largest new iron ore mine in over 50 years and is on time and on budget. South Flank's high quality ore will increase WAIO's average iron ore grade from 61 to 62 per cent, and the overall proportion of lump from 25 to 30-33 per cent."
"South Flank's ore will supply global steel markets for the next 25 years, helping to build electricity, transport and urban infrastructure across the globe. And its high quality ore will have an important role in helping BHP's customers lower their greenhouse gas emissions," he added.
Western Australia's Premier, Mark McGowan, was pleased to see the project achieve its first production.
He said: "The South Flank project is an example of my government's commitment to working with industry to take advantage of the international market and business development trends to create Western Australian jobs. I congratulate BHP on the first production of ore and look forward to this project continuing to provide jobs for Western Australians and delivering considerable economic benefit for our state."
