A billion dollar boost at Olympic Dam and OZ Minerals’ $600m expansion bolster mining sector

The two biggest players in SA’s mining sector are going from strength to strength with a return to profitability at Olympic Dam and a major new investment for OZ Minerals.

BHP’s Olympic Dam mine in the state’s Far North has surged back to profitability, while OZ Minerals has announced a $600m expansion to its Prominent Hill copper and gold mine, in a double dose of good news for the state’s mining sector.

The massive BHP mine, which has struggled to turn a profit in recent years, last financial year delivered underlying earnings of $US285m, with revenue up by $US748m - more than $1 billion in local currency.

The result is a turnaround from two consecutive years of losses, and was on the back of the best production performance at the mine since BHP bought it in 2005, with 205,000 tonnes of copper produced, as well as 146,000 ounces of gold.

Meanwhile Adelaide-based OZ Minerals, itself now a $7.3bn company, said it had given the go-ahead for a $600m expansion project at Prominent Hill, southeast of Coober Pedy.

The Wira “shaft mine” project would increase annual copper production at the project by about 23 per cent while also reducing operating costs.

Work on the new project was expected to start in the first quarter of 2022 and will be completed by 2024.

The new expansion project now means the mine is expected to be producing copper out to at least 2036, but OZ said there were further expansion options available and other nearby ore bodies which warranted investigation.

An OZ Minerals staff member at the Prominent Hill Mine in Far North SA.

OZ also announced it had more than tripled its half year net profit to $269m on revenue of $986.1m, up $410.4m.

Managing director Andrew Cole said the company’s financial result was driven by a strong operational performance and strong copper prices, while the expansion was also a significant milestone for the company.

“The expansion creates an exciting future for the asset by extending the mine’s life, lowering unit operating costs, increasing annual copper production by 23 per cent and enabling lower emissions,’’ he said.

“Importantly, investment in the shaft mine expansion not only provides access to areas previously thought uneconomic it also opens up potential new prospects.’’

A BHP worker at Olympic Dam.

OZ also operates the Carrapateena mine in Far North SA, and is working on a nickel and copper project in the West Musgrave region of Western Australia. It expects to make a decision about whether to proceed with that project next year.

OZ has already signed off on an expansion at Carrapateena, which started mining in late 2019, with early work on that project to start in the last quarter of this year.

Premier Steven Marshall said OZ moving ahead with the Wira project was “a real show of confidence in South Australia’s mining sector”.

“It’s going to be a massive shot in the arm for the local economy and importantly, it’s set to extend employment for the 1200 OZ Minerals employees in South Australia and hopefully create even more jobs in this vital sector for the state.'' he said.