BHP Billiton drops expansion of Olympic Dam

The South Australian government declared the Brownfield Expansion (BFX) a major project in February 2019 after BHP announced in 2017 it was investigating the project. The AUD3.5 billion (USD2.5 billion) expansion was expected to increase copper output at Olympic Dam from 200,000 tonnes a year to up to 300,000 tonnes. It was also set to raise output of gold, silver and uranium, which are produced as a by-product of copper.

"Following more than 400 kilometers of underground drilling associated with the Brownfield Expansion project studies, we have improved knowledge of the ore body's variability," BHP said in its operational review for the quarter ended 30 September.

"The studies have shown that the copper resources in the southern mine area are more structurally complex, and the higher grade zones less continuous than previously thought. This has provided challenges for the economics of the BFX project, and we have decided the optimal way forward for now is through targeted debottlenecking investments, plant upgrades and modernisation of our infrastructure."

BHP also revised Olympic Dam's projected maximum copper production from 350,000 tonnes per annum, to 300,000, following the drilling assessments.

The announcement came as BHP reported output of more than 50,000 tonnes of copper at Olympic Dam in the three-month period to the end of September - the highest quarterly production since 2015. Uranium production during the same period totalled 874 tonnes, down from 937 tonnes during the same period in 2019.

"Over the next two years, our focus will remain on completing our asset integrity programme. This will underpin more stable operations and expected copper production of more than 200,000 tpa," the company said.

The long-term opportunity for Olympic Dam "is unchanged, with our enhanced understanding of the resource in the Southern Mine Area and the promising results from Oak Dam providing strong foundations for unlocking the full growth potential of this asset."