* Port Hedland outer harbour will help output double
* Final investment decision expected later this year
* Approval contingent on protection for dugongs, turtles, whales
CANBERRA, May 31 (Reuters) - BHP Billiton on Thursday cleared the last external hurdle for a planned $10 billion expansion of its Port Hedland harbour in Western Australia that would help the world's biggest miner double output of iron ore.
BHP won environmental approval from the federal government for the project, clearing the way for the Anglo-Australian miner to make a final investment decision on the Port Hedland outer harbour project in the Pilbara region later this year.
The expansion is one of the top three projects BHP has outlined in an $80-billion capital spending plan, and is seen as the one most likely to go ahead, even as the company pares spending due to global uncertainty and shareholder jitters.
"In terms of the timing for project approvals, that hasn't changed from what we've been saying -- the second half of this calendar year and still very much subject to board approval," a BHP spokeswoman said.
"Today's decision doesn't change that. It just really means we've met all the regulatory processes."
Earlier this month, BHP Chairman Jacques Nasser said the company was rethinking its expansion plans "everyday" and wouldn't spend the full $80 billion over five years as outlined by Chief Executive Marius Kloppers in 2011.
"As we are 'long options' we will be careful to approve projects in sequences that maximise value, reduce risk and balance the considerations of short- and long-term returns," Kloppers said at a recent conference, outlining the company's more cautious approach.
When fully built over about eight years, at a cost analysts estimate at more than $20 billion, the outer harbour would be able to handle 240 million tonnes a year of iron ore, adding to 220 million tonnes capacity the company is targeting in an inner harbour expansion already underway.
The development would include a four kilometre-long jetty, a four-berth wharf and a 32-kilometre shipping channel.
The investment is crucial if BHP is to double iron ore production to 440 million tonnes a year as planned.
In a statement, Environment Minister Tony Burke said the national environmental approval included 37 conditions, including measures to protect dugongs and marine turtles, and to ensure no whales were nearby during noisy work on a new jetty.