Rumours have been circulating for some time, but the news is now official – BHP Billiton’s proposed $US30 billion expansion of the Olympic Dam open pit has been shelved with the company citing falling commodity prices and higher capital costs.
The company says, however, that the postponement does not mark the end of the project, and BHP Billiton adds they will investigate an alternative, less capital-intensive solution involving new technologies to substantially improve the economics of the project.
“As with any capital commitment, all investment options are scutinised as they move through our approvals process and our highest returning projects are prioritised,” says BHP Billiton CEO Marius Kloppers. “Value is always our primary consideration. We believe today’s decision reflects an appropriate prudent and disciplined course of action. However the long term outlook for the copper market remains strong and we will continue to work closely with all stake holders as we refine our longer term development plans.”
South Australia’s Minister for State Development Jay Weatherill said the decision came as a “major disappointment” not just for SA but for Australia as a whole. He noted that workers and businesses that had planned on the expansion will be particularly hard hit.
“It is also a particular disappointment for the regional towns like Roxby Downs, Port Augusta, Port Pirie and Whyalla who had started to experience the benefits in activity that this expansion was bringing,” he said. “What I have explained to BHPB is that beyond their regulatory approvals, they also need community permission to develop this resource. Given that this is the second time they have disappointed South Australians, there can be no doubt that this community permission will come at a cost.”
Weatherill noted that BHP Billiton has told him they have every desire to continue with site preparation and engineering work in anticipation of such a time when they are able to proceed with an expansion.
“The discussions BHPB have requested with the South Australian Government will take place over the coming weeks, and will need to be concluded before the end of the year,” he said.
Opposition leader Tony Abbott was quick to blame the carbon and mining taxes for the decision, leading Resources Minister Martin Ferguson to respond to the criticism by pointing out that MRRT does not apply to copper or uranium and therefore had nothing to do with the Dam.
The Olympic Dam expansion was due to generate 6,000 construction jobs, 4,000 ongoing jobs and 15,000 indirect jobs.