Many will view BHP's Olympic Dam project announcement as a dark day, but not all is lost

THE decision by BHP Billiton to abandon its $30 billion Olympic Dam expansion plan will be portrayed by many as the end of SA, writes Michael McGuire.

Olympic Dam

THE doom and the gloom is easy enough to conjure. The decision yesterday by BHP Billiton to abandon its $30 billion Olympic Dam expansion plan will be portrayed by many as the end of South Australia, writes Michael McGuire.

-----------

For the particularly pessimistic, even another State Bank moment.

It's easy enough to see why. For many years the expansion of Olympic Dam has been held up as the saviour, the single project that would allow the state to move from the slow lane to the fast lane of the Australian economy.

Its value was not only about what it would do for the economy, but what it would do for the South Australian psyche.

It has been spruiked by evangelical politicians and lionised by business leaders.

But yesterday all that seemed to come to an end.

The appropriately sombre Premier Jay Weatherill could not disguise his annoyance.

"There's disappointment on behalf of those South Australians who have worked incredibly hard to make this happen; disappointment for those businesses that have geared themselves up ... and for regional towns that were beginning to experience the benefits of expansion," Mr Weatherill said.

However, University of Adelaide economics professor John Spoehr believes there is opportunity for the state. "Olympic Dam is only one of many projects in the mining and resources industry that are on the drawing board," he said.

"There is no reason to believe this will lead to the terminal decline of South Australia."

Prof Spoehr also said the delay on Olympic Dam could work in SA's favour.

If Olympic Dam had come on stream it would have exacerbated existing skills and equipment shortages within the state.

Mining has been a swiftly growing part of the economy over the past decade - even without the huge contribution expected from BHP.

As recently as 2004 only $64 million was spent on mining exploration.

Last year the figure was $313 million.

THERE are 20 mines currently operating in SA. In 2002 there were only four.

Total mineral production is worth $4.3 billion a year.

The State Government's Primary Industries' website lists another 27 projects as being in development.

Last week Oz Minerals opened its $148 million Ankata underground mine, which complemented its existing open-pit operation.

Although it seems mining has been talked up for a decade, the industry only accounts for about 4.3 per cent of the state's economy.

By comparison, agriculture is about 5.6 per cent and manufacturing 9.3 per cent.

Prof Spoehr also said yesterday's announcement by BHP Billiton chief executive Marius Kloppers should be viewed as the project being delayed rather than cancelled.

"Given the value of the ore body it is likely that BHP will extract it, if not soon, then in the not-too-distant future," he says

In making the announcement yesterday Mr Kloppers reinforced the Olympic Dam expansion remained on BHP's "to-do" list.

Mr Weatherill also said the future of the state's economy was not dependent on the expansion.

"We've also been putting an enormous amount of effort into advanced manufacturing ... into marketing our premium food, grown in a clean environment and also promoting very heavily the wonderful opportunities associated with our beautiful capital city," he says

Prof Spoehr also said industries such as defence, education and the development of clean energy were all positives as SA already led the nation in installed wind farm capacity.

Construction, Forestry, Mining and Energy Union state secretary Aaron Cartledge said he expected only a small impact on jobs.

"I haven't heard that anyone will be retrenched because of this," he said.

Mr Cartledge added other smaller mines might find it easier to find skilled workers as they would not all be drawn to Olympic Dam.