The South Flank mine in West Australia's Pilbara region is expected to start producing iron ore by 2021 and is hoped to continue doing so for a further 25 years.
With an iron product of 62-63 percent, the mine will boost the average grade of BHP ore from the region by 1 percentage point to 62 percent.
Most of the ore will be shipped to China to support the country's demand for steel.
The blast marks the start of an 8.9 million tonne removal process, meaning there is a long way to go before the mine is operational, but during that time the project will ensure around 2,500 jobs as well as a further 600 ongoing roles.
However, BHP intends to automate parts of its South Flank operations, with the use of fully automated drills and eventually trucks, boosting operational efficiency and safety.