Olympic Dam reports $US79 million loss, is on the lookout for new leader
Olympic Dam’s turnaround story is not yet complete, with BHP’s mega mine posting another loss for the past financial year as it starts the hunt for a new leader.
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The Olympic Dam mine in South Australia’s Far North has increased its full year loss and is on the lookout for a new leader, global miner BHP has announced.
In reporting its full year results, BHP said Olympic Dam, which produces copper, uranium, gold and silver, had made a full year loss before interest and tax of $US79 million, on revenues of $US1.463 billion.
This is up from a loss the previous financial year of $US58 million on revenues of $1.351 billion.
The mine last reported a profit, of $US39 million off revenues of $US1.255 billion in 2017-18, and has for many years underperformed in comparison with BHP’s high-margin assets such as Western Australian iron ore.
But the company said the “multi-year asset integrity program (was) progressing well and tracking to plan’’ and a scheduled major smelter maintenance in the first half of 2021-22 would get rid a bottleneck in processing.
Copper production guidance for 2020-21 was 180-205,000 tonnes of copper, compared with 172,000 tonnes in the past financial year.
This figure was affected by preparatory work related to the replacement of the refinery crane and unplanned downtime at the smelter during the March quarter.
BHP also announced Laura Tyler - asset president Olympic Dam since 2018 - would be promoted to chief technical officer, and a new leader would be sought for the mine.
“During her tenure as asset president, Laura has improved BHP’s understanding of the resource, improved underground operations, achieved record development, and the highest grade since BHP has owned the asset,’’ the company said in a statement.
“She has also lifted Olympic Dam’s safety and culture performance, increased the focus on reliability and advanced the asset integrity program.
“A replacement for the Asset President Olympic Dam will be the subject a future announcement.’’
In the interim, Justin Bauer, currently general manager surface development & planning, will become acting asset president.
“He understands the unique opportunities and importance of the Asset and will continue to deliver on the company’s business plans and long-term commitments for Olympic Dam and South Australia,’’ the company said.
BHP’s possible brownfield expansion of Olympic Dam (BFX), worth up to $3.7 billion, was one of a number of projects earmarked for streamlined approval processes by the Federal Government in June and has major project status from the State Government.
BHP is currently investigating options to boost annual output at Olympic Dam, in the state’s Far North, from around 200,000 tonnes of copper to between 240,000 and 300,000 tonnes.
The State Government estimates that 1800 jobs could be created during construction, with 600 extra ongoing jobs at the mine.
But the company is yet to give solid commitments around timelines, financial investments and job numbers for the expansion, as it continues work on internal feasibility studies.
The BFX project could involve targeted underground development in the resource-rich southern mine area, investment in surface processing facilities, new technology and supporting infrastructure.
The BHP board is expected to make a decision on its preferred way forward next year, with plans to start work some time in the next four years.
Across the broader BHP group, the company said falls in commodity prices since the onset of the coronavirus pandemic have caused its profit to slump, and warned major economies would contract heavily in the coming year.
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BHP posted a net profit of $US7.96 billion ($A11.03 billion) for the 12 months ending June, a 4 per cent decline on the previous year.
Earnings (EBITDA) from continuing operations were $US22.1 billion ($A30.6 billion) for financial year 2020, a 5 per cent decline on the previous corresponding period.
BHP also issued a final dividend of US55c per share, a US23c fall from the final dividend issued to shareholders in financial year 2019. Shareholder returns equate to $US6.4 billion ($A8.87 billion) for the year.
BHP chief executive Mike Henry said the 12 months to June 30 had been riddled with challenges, including the onset of the global pandemic, social unrest in Chile and significant price volatility in commodity markets.
“BHP’s operations generated robust free cashflow and our balance sheet remained strong, with net debt finishing the year at the low end of our target range,” he said.
“We expect most major economies will contract heavily in 2020, China being the exception. Recovery will vary considerably by country.”