July 14 (Bloomberg) -- Xstrata Plc, the world’s biggest thermal coal exporter, plans to start its first shipments of iron ore concentrate from Australia to Asia during the first half next year.

The project, part of the $542 million underground expansion of the Ernest Henry copper mine in Queensland state, is targeting production of 1.2 million metric tons a year of magnetite concentrate with 22 percent iron content, Zug, Switzerland-based Xstrata said in an emailed statement.

“The magnetite concentrate will be sent by rail from Cloncurry to Townsville,” Xstrata said in the statement, making it the first iron ore concentrate producer in Queensland. “We expect first shipments to Asia from the Townsville port in the first half of 2011.”

Xstrata this month resumed work on the Ernest Henry expansion after the Australian government amended a planned mine tax. The Ernest Henry underground mineral resource contained 72 million tons of probable reserve at 1 percent copper and 22 percent magnetite, Xstrata said in a December statement.