Mining giant BHP Billiton (ASX:BHP) is unlikely to approve a long awaited expansion of its Olympic Dam copper and uranium mine in South Australia’s outback this decade.
This news comes as the world’s biggest miner disclosed plans to build a pilot processing plant at the mine and conduct a four-year long trial of a processing method BHP hopes will help make the project profitable.
The miner, which put the US$33 billion expansion plan on hold two years ago, as a result of falling commodity prices and higher costs, was supposed to begin work at the site last year.
Doubts about the lauded project first emerged in early 2012 when BHP told markets of its intention to cut back an $80 billion 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.”
Then in September, 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.
One of the processes it has been testing is heap leaching, a complex chemical process used to extract copper, uranium and precious metals from ores.
If BHP is granted permission to build the plant it would start construction in July next year, with a three-year operation period slated to begin in October 2016.
“While the application is for a trial, a successful trial will not necessarily lead to a full-scale heap-leach project,” BHP said in the statement.
“Further, the extent and nature of any potential full-scale project is not known at this stage.”
BHP’s request is only to study processing the ore, but there is no mention of how it plans to access the deep orebody.
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.
Images courtesy of BHP Billiton