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BHP is looking to significantly boost its iron ore export capacity from Port Hedland in a move that could boost royalty revenues for Western Australia.

While the mining giant is still looking to reach its licensed capacity of 290 million tonnes a year in the medium term, BHP says improvements in its supply chain could let it increase future production beyond that.

“BHP is committed to the long-term sustainable future of the Pilbara as an economic powerhouse, both during and post the COVID-19 recovery,” said BHP’s acting asset president for Western Australia iron ore, Tim Day.

An increase in production “has the potential to deliver flow-on benefits for local jobs, local business and additional royalty revenues”, he said.

BHP paid $US1 billion ($A1.5 billion) in royalties to the state of Western Australia from its iron ore operations last year, according to its 2019 economic contribution report.

BHP produced 238 million tonnes of iron ore in fiscal 2019 and is forecasting to produce 273 million to 286 million tonnes this fiscal year.

The company has begun consulting with stakeholders about its options to expand export capacity, the first step in a longer process requiring approval from the WA Department of Water and Environmental Regulation.

The company is expected to request an increase of up to 330 million tonnes per year.

Some Port Hedland business owners and property developers have previously campaigned against more iron ore exports because of the dust associated with iron ore mining and shipments, something BHP pledged on Tuesday to address.

The company said it would spend $300 million in the next five years to improve air quality and reduce dust emissions across its Pilbara operations, on top of the $400 million it has already spent this decade.

The company will build wire fences at port operations, which has proven to significantly reduce potential from dust lift-off from stockpiles, it will trial using vegetation barriers at the West End of Port Hedland, in partnership with Curtin University and Greening Australia, and will implement new dust control projects across its entire Pilbara supply chain.

“We recognise we have a shared responsibility to address dust issues in the Pilbara,” BHP port general manager Nilson Davila said.