BHP still 'very serious' about Olympic Dam expansion

BHP Billiton (ASX:BHP) chief Marius Kloppers said on Tuesday that the company is "very serious" about pursuing cost-effective expansions to the Olympic Dam mine despite its surprise shelving of the project back in August.

Kloppers made the remarks after BHP received an extension on its existing indenture agreement for the Olympic Dam mine site from the South Australian state government, effectively granting the diversified mining giant four more years to reach a decision on its fate.

The Herald Sun reports that in exchange for the extension of the agreement outlining the terms for the Olympic Dam expansion BHP will spend AUD$650 million in South Australia on a broad array of areas, including technological research, environmental studies, the mining services sector and indigenous projects.

BHP scuppered its original Olympic Dam expansion plans in August after determining the project to be uneconomic, at a time that operating costs were surging in Australia and spot prices for commodities were plunging.

Kloppers says the company is currently striving to implement the Olympic Dam expansion via cost-effective means, highlighting the huge investment commitment that BHP has made.

"If the cost environment mitigates as current projects roll off, those are going to obviously be enablers [for the Olympic Dam project]," said Kloppers.

"BHP Billiton [is] working very hard to give this project the best chance that it has got. We are committing over half a billion dollars in new technology in order to do so."