Olympic Dam expansion is dead

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After years of speculation, South Australian investors have had to accept grim news: BHP Billiton’s Olympic Dam expansion will not be happening.

The resources giant this week announced that crippling development costs and weak commodity prices led to the decision to shelve its US$30bn plan to expand the mine.

The Olympic Dam expansion was expected to create 8,000 construction jobs and 4,000 permanent jobs in desert community Roxby Downs, as well as considerably more associated industry jobs in South Australian coastal ports.

The expansion would have also created the world's largest uranium mine and increased copper output almost fourfold to 750,000 tons a year. South Australia’s economy was to further benefit from a 6% addition to gross state product.

The Australian reported that the company made the announcement after reporting a 35% drop in full-year profit and a freeze on new project spending for the 2013 financial year.

BHP Billiton chief executive Marius Kloppers said the decision was motivated by the high cost of development in Australia. "The decision is almost wholly associated with, in the first instance, capital costs," he said.

Kloppers said BHP would now examine less expensive options to expand the mine, but no timeframe has been given.

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Comments
  • Alistair MacLeod says on 23/08/2012 12:49:12 PM

    What a blow to Australia, the costs associated with development now in this country are restricting Australias growth. It seems the days of the great developments like the Snowy Mountain scheme are all too long ago. While China pushes ahead in development, Australia seems to be sinking into a rut of what could of been??? Alistair MacLeod

  • Colin Smee says on 23/08/2012 01:01:52 PM

    The commodity will not go away - it is a shame this is the course - but they will dig it up sooner or later.
    Perhaps when we become a third world nation.

  • Mark Farrelly says on 23/08/2012 02:20:38 PM

    Relax everyone. News was a postponement not a cancellation. They are reviewing a cheaper way to do the same thing. Expect they'll announce Plan B next year. Also BHP confirmed they will spend $22.8 BILLION this year in Capital Expenditure in the same announcement. Sorry but facts often get lost among hysteria. Resource is still there, it will get dug up eventually. Remember there is still $450 BILLION being spent in Mining Investment THIS YEAR ALONE. And the boom doesn't start till we start digging the stuff up and selling it, so there's years of income to be made yet.

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