BHP Rejigs Its South Australian Copper Riches

By Glenn Dyer | More Articles by Glenn Dyer

Mining giant BHP has shelved long-held plans for a $3.5 billion expansion of its Olympic Dam mine in South Australia because of the improving outlook for the recently discovered Oak Dam copper and gold deposit nearby in outback South Australia.

In fact, judging by BHP’s comments yesterday, some sort of development of Oak Dam linked to Olympic Dam’s facilities is not out of the question. Rather the future expansion could still happen but in a different way.

Although the Olympic Dam gold, silver, and uranium mine recorded its best quarterly performance in five years in the three months to September, BHP said it had decided against proceeding with a brownfield expansion project of the asset after conducting more than 400 kilometres of drilling which has improved its knowledge of the ore body.

“This has provided challenges for the economics of the brownfield expansion project, and we have decided the optimal way forward for now is through targeted de-bottlenecking investments, plant upgrades and modernisation of our infrastructure,” BHP’s quarterly report said. “We will continue to study longer-term options for growth.”

Adding pressure on BHP has been the latest solid results from the nearby Oak Dam copper prospect in South Australia, Oak Dam is 65 kilometers to the southeast of Olympic Dam and 45 kilometres north east of OZ Minerals Carapateena mine.

While a smaller deposit (at the moment) to Olympic Dam, it is said to have better grades of copper, gold, uranium and silver (like Olympic Dam).

In the September exploration report BHP said assays of Oak Dam drilling cores had confirmed further high grade mineralised intercepts of copper with associated gold, uranium and silver.

Assay results from 12 of the 14 drill holes delivered between 0.24% 4.20% copper, which have seen BHP decide to start resource definition drilling in the first half of 2021.

BHP reported that the results at Oak Dam would help unlock the full potential of Olympic Dam.

“The long-term opportunity for Olympic Dam is unchanged, with our enhanced understanding of the resource in the Southern Mine Area and the promising results from Oak Dam providing strong foundations for unlocking the full growth potential of this asset,” BHP said in Tuesday’s report.

“The long-term opportunity for Olympic Dam is unchanged, with our enhanced understanding of the resource in the Southern Mine Area and the promising results from Oak Dam providing strong foundations for unlocking the full growth potential of this asset,” BHP stated.

BHP CEO Mike Henry also highlighted a significant production increase at Olympic Dam, with 52,000 tonnes of copper for the September 2020 quarter, up 47% on the corresponding period and the best since 2015.

The Olympic Dam expansion project, which BHP said would cost up to $US2.5 billion ($3.5 billion), was proposed in 2017 and was hoped to significantly increase copper production.

The expansion planned to expand surface infrastructure including the smelter, mill and refinery while unlocking higher volumes of higher-grade copper ore from the mine’s southern area of the deposit.

BHP had initially anticipated reaching an investment decision on the project this year after it had pushed out a decision for a year in 2019.

BFX is the latest in a long line of Olympic Dam expansion projects that have failed to make it to the starting line.

Previous to it there was a plan for a huge heap leading operation which in turn replaced a decade old plan for a $30 billion expansion in turning the underground operation into a huge open cut.

As a lead up to BFX, BHP spent the best part of $650 million over several years de-bottlenecking the operation, streamlining and upgrading the various processes;

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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