The expansion of the Olympic Dam copper and uranium mine is in doubt after BHP Billiton put off approving the project in order to investigate less capital-intensive development options.
A decision on approval for the expansion had been scheduled for mid-December but BHP Billiton is not ready to make a positive decision. CEO Marius Kloppers said, "As we finalised all the details of the project in the context of current market conditions, our strategy and capital management priorities, it became clear that the right decision for the company and its shareholders was to continue studies to develop a less capital intensive option to replace the underground mine at Olympic Dam."
The mine in South Australia primarily exists to mine copper and gold, while uranium has grown in importance as a by-product in recent years. Apart from gold, recent levels of demand for Olympic Dam's products have been relatively weak: copper because of disappointing rates of economic growth; and uranium because of demand uncertainty as Japan develops a new energy policy. Nevertheless, BHP Billiton sees a "strong" outlook for the copper market in the long term.
The expansion plans, which secured envrionmental approval in October 2011, would see ore recovered from an open pit operating alongside the existing underground mine. The new pit would be developed over a period of about 11 years and the whole site would eventually have a uranium output of a massive 19,000 tU3O8 (16,100 tU) per year, including that recovered under safeguards from copper smelters overseas. Existing operations have a nameplate capacity of 4500 tU3O8 (3800 tU) per year.
BHP Billiton's Andrew Mackenzie stressed that the Olympic Dam deposit "is a resource of enormous value" and the company would continue to work on alternatives to the open-pit scheme that "have the potential to substantially improve the economics of the expansion, while also completing some early stage site works."
The company did not say if it would seek equity partners or specifc customer commitments to rebalance the economics of the expansion.
Researched and written
by World Nuclear News