BHP says any new plan to expand its Olympic Dam operations its still years away
BHP’s play for OZ Minerals will add to the case for expanding its South Australian copper operations, but any expansion plan is still years off.
It will be at least two years before the mining giant lays out a fresh plan for the future growth of its Olympic Dam copper mine in South Australia, according to BHP chief technical officer Laura Tyler.
BHP’s takeover bid for South Australian copper miner OZ Minerals is the latest issue to confound BHP’s thinking over the future of Olympic Dam, where it has spent the last 15 years considering and rejecting plans to make the most of the massive deposit it acquired through the takeover of Western Mining.
But, speaking after an address to the Melbourne Mining Club on Thursday, Ms Tyler told reporters that even without the acquisition of OZ Minerals’ South Australian mines, it would likely be at least two years before BHP worked through a long-term expansion plan for Olympic Dam’s future.
BHP dumped its last expansion plan in 2020, the $3.5bn brownfields expansion (BFX) – which would have expanded Olympic Dam’s smelter, mill and refinery to support annual output of around 350,000 tonnes of copper – after concluding high grade ore zones in the southern part of the Olympic Dam ore body were more “structurally complex” than initially thought, and the higher grade zones less continuous.
While BHP approved a major rebuild of the smelter at the time, chief executive Mike Henry made it clear that Olympic Dam would not get any further fresh capital until it could run consistently and profitably at its current 200,000 tonne a year nameplate capacity.
Since then BHP has completed its $500m rebuild of the Olympic Dam smelter, which will carry the mine’s processing plans until at least 2027 before another major rebuild is due.
Olympic Dam is one of South Australia’s biggest employers and BHP’s failure to settle on a long-term plan to expand its operations has been a source of perennial frustration for the South Australian government.
Its initial plan, for a massive $20bn open cut mine to access the ore, was abandoned in 2012 as too costly. Since then a heap leaching plan has been considered and abandoned – though Ms Tyler said that remains a long-term option at the mine.
BHP’s decision to jettison the BFX in 2020 further complicated its relationship with South Australian politicians on both sides of the aisle.
Ms Tyler said BHP is now running a new drilling campaign beneath the current Olympic Dam mining area in an effort to get a better understanding of its higher grade zones, but said a decision on future expansion – including the timing of construction of a second smelting stage – would need to wait until BHP has finished drilling out its Oak Dam discovery, at least.
And that could take another 12 to 18 months before a formal resource is declared for the high-grade copper discovery, Ms Tyler said.
“There’s a lot of ambiguity that still needs to be worked through, including what is the size of the resource at depth at Olympic Dam and what size of extraction does it support?” she said.
“Does that mean it stays at 10 to 11 million tonnes per annum? Or does it go greater or less? And then also what comes out of Oak Dam, and what would that add as a feed?”
BHP made the discovery of high-grade copper at Oak Dam in 2018 and has since drilled more than 100km of core at the deposit, with six rigs currently on site. Ms Tyler said she expected to be able to give more detail on recent drilling results early in the new year, but said an initial resource was likely to still be at least 18 months away.
And the acquisition of OZ Minerals would likely push a decision even further out, given BHP would need to work through its options to incorporate concentrate from OZ Minerals Prominent Hill and Carrapateena mines into its future plans.
And even then BHP could still push a decision out until the 2030s, Ms Tyler said, if it decides to again rebuild the smelter in 2027, rather than move to a two-stage smelting process.
BHP shares closed up 96c, or 2.1 per cent on Thursday, at $46.84.