BHP’s Olympic dam expansion off agenda until prices improve
World’s largest miner BHP Billiton (ASX:BHP) said Friday that plans to resume expansion at its massive Olympic Dam copper and uranium mine in South Australia’s outback is off the agenda until commodity prices come back up.
BHP shelved plans for a US$33 billion expansion of the vast asset, which holds the world's largest uranium deposit, and the fourth biggest copper and gold deposits in 2012, blaming falling commodity prices and higher costs.
"Our immediate challenge is how we self-fund the required investment by being prudent and creative with our capital and engaging our workforce to not only reduce costs but also accelerate the initiatives that will reduce our costs," Darryl Cuzzubbo, Olympic Dam asset president, said in a business speech emailed to MINING.com.
Doubts about the lauded project, once considered a flagship assets, first emerged two years ago when BHP told markets of its intention to cut back an $80 billion five-year capex programme. A JP Morgan research note out a few weeks later also suggested the Olympic Dam would not go ahead "for at least three or four years, if at all.”
In September last year, chief executive Andrew Mackenzie said the long awaited expansion was in need of a technological breakthrough that can make it happen.
The ambitious expansion was expected to create the world's largest uranium mine within 11 years. It included the construction of 270km of power lines, a 400 km pipeline, a new desalination plant and a 105km railway.
The miner has been searching for cheaper ways to develop new smelting and extraction technologies to cut costs and offset lower commodity prices.
BHP still hopes to trial a hi-tech method of extracting minerals from ore at Olympic Dam and undertake financial modelling of expansion options.
"Once we are able to run our existing operation at full capacity, we then – and only then – earn the right to grow," Cuzzubbo said.
The Olympic Dam, already Australia's largest underground mine, currently employs over 3,500 people. The mine features the world's largest uranium deposit, and fourth largest copper and gold deposits.
Image courtesy of BHP Billiton.