BHP rethinks Olympic Dam – maybe more uranium #uranium
BHP rethinks Olympic Dam
- by:Matt Chambers
- From: The Australian
- November 25, 2014 12:00AM
BHP Billiton has outlined new plans to turn the Olympic Dam mine in South Australia into the world’s second-biggest copper mine and potentially the world’s biggest uranium mine, in a big-ticket expansion that could see extra production at the start of next decade.
The plans, which BHP hopes to start exploring in earnest this year, are a big pullback from a $US30 billion open pit expansion of the giant copper-uranium-gold deposit shelved in 2012.
But they are the strongest indication since then that BHP is still serious about a big expansion of the massive Olympic Dam deposit that has been talked about since BHP acquired the mine in its 2005 takeover of WMC Resources.
If the expansion goes ahead, it represents an extra $US3bn ($3.5bn) of potential annual revenue for BHP at current copper prices.
In presentations to analysts and media in Sydney yesterday, BHP chief financial officer Peter Bevean revealed the mining giant was targeting an underground mine expansion that would start producing in 2021-22 and ramp up to copper production of more than 450,000 tonnes a year by 2024.
This is more than double the 184,000 tonnes of copper Olympic Dam produced in 2013-14, but is well down on the 750,000 tonnes a year previously flagged under boomtime plans for the world’s biggest open-pit mine.
“If we can make it work, it should be very compelling — this is still a large project,” said Mr Bevean, who until recently was BHP’s copper chief.
Despite flagging the expanded Olympic Dam would be in the world’s least-expensive quartile of copper mines, Mr Bevean noted it would still need to compete for funding approval with BHP’s other growth projects.
“We’re going to need everybody to come to the party on this one; we can do so much, but if we’re going to get this project up, we’re really going to need the support of the broader community, the support of the government and so on,” he said.
“It’s not a slam dunk.”
The expansion would be good news for South Australia, which did not hide its disappointment when the shelving of the previous expansion scotched the struggling state’s hopes of a resultant economic surge.
Yesterday, South Australian Resources Minister Tom Koutsantonis gave measured support to BHP, saying he welcomed the miner’s commitment to unlocking potential jobs and economic activity for the state.
Converting Olympic Dam’s uranium, gold and silver by-products into “copper equivalent” would give the mine a total production of 750,000 tonnes a year, BHP said.
“That would make it probably the second-biggest copper mine in the world,” Mr Bevean said.
He would not be drawn on the capital cost of the expansion, but said it would be a lot less than $US30bn and much less than the old expansion on a “per tonne” basis. This is partly because underground mining would avoid the cost of six years’ dirt removal needed to access the ore body through an open pit.
The project also depends on the success of a previously announced acid heap leach pilot test which, if successful, would result in a bigger plant that worked in parallel with Olympic Dam’s current concentrator and smelter.
“This approach will reduce the capital intensity of the mine expansion and surface infrastructure,” Mr Bevean said.
BHP would not say how much uranium production would increase by, but if it grows proportionately to planned copper production, it would be at 10,000 tonnes a year. This would beat Canada’s recently started Cigar Lake mine, which is ramping up to 8100 tonnes a year.
“We are going to get these additional tonnes into the market in 2024, and if the stars align we would start producing from about 2021-22 onwards,” Mr Bevan said.
“We expect the uranium market to develop into that — there have been some announcements in China in regards to reducing the amount of fossil fuels and that’s got to be good news for uranium.”
Olympic Dam’s current copper production of 184,000 tonnes a year represents total copper equivalent production of about 310,000 tonnes, if the same ratios in BHP’s 2024 extrapolation for uranium, gold and silver credits are used.