$350m Olympic Dam overhaul to stall copper output

BHP’s copper and uranium mine is to have its biggest revamp since being bought from WMC Resources 12 years ago.

BHP Billiton will spend $350 million on the biggest maintenance overhaul of South Australia’s Olympic Dam underground copper and uranium mine since the miner acquired it from WMC Resources 12 years ago.

The overhaul, revealed in the miner’s June quarter production report yesterday and to start this quarter, will take more than 100 days and mean output this financial year from the state’s flagship mine will be even lower than last year’s troubled production.

BHP said the overhaul would provide a base for expanding the mine.

For the financial year just ended, Olympic Dam’s production fell 18 per cent to 166,000 tonnes of copper because of a statewide power outage in September and October and unplanned maintenance at the copper refinery over summer.

This financial year, copper production will drop to 150,000 tonnes.

“On completion, the improved operational performance will underpin an expected increase in copper production to approximately 215,000 tonnes in the 2019 financial year,” BHP said. “This will provide a stable base for the potential to increase capacity to 280,000 tonnes in the 2022 financial year.”

For BHP, the reduced revenue and extra spending will be offset in the copper business by a jump in production at the giant Escondida mine in Chile.

For South Australia, it means lost royalties but an unexpected $350m investment boost.

“There will be 1300 contractors at Olympic Dam during the peak of construction as teams work around the clock to dismantle, rebuild and upgrade integral components of the facility,” Olympic Dam boss Jacqui McGill said.

The overhaul is not related to the blackouts.

During the maintenance, BHP will rebuild key elements of its smelter flash furnace, demolish the electric slag furnace and build a new one and remove and replace a five-storey electrostatic precipitator.

Olympic Dam mine manager Troy Wilson said last month that BHP had spent $250m developing its Southern Mine Area, which would provide expanded volumes.

BHP describes the Olympic Dam body as guitar-shaped, with the neck of the guitar the area previously mined and the body the Southern Mine Area. This is where BHP had plans for a giant $US30 billion boomtime expansion that did not go ahead, despite $1bn being spent on studies.