Global miner BHP Billiton moved a step closer on Monday toward an estimated $20 billion to $30 billion expansion of its Olympic Dam copper and uranium mine, securing environmental approvals for the project in the deserts of southern Australia.
The project, to be developed in stages over 30 years, would nearly quadruple the mine's annual copper output to 750,000 tonnes to help meet demand from Asia, especially China where copper consumption is forecast to surge 6 percent this year.
The national government, together with the South Australia state government, have imposed more than 100 environmental conditions in approving the project, but are keen for it to go ahead because of the thousands of jobs it is expected to create.
BHP Billiton, expected to make a decision on final go-ahead for the project in mid-2012, now has to weigh up the conditions imposed as part of assessing its overall feasibility.
We will now take these conditions into account and incorporate them into our final assessment and recommendation to the board next year, BHP Billiton's uranium president, Dean Dalla Valle, said in a statement.
The conditions include a desalination project and pipes to bring water to the mine from over 300 kilometers away, and an environmental buffer zone of 140,000 hectares, roughly equivalent to an area the size of London.
The strict conditions I've imposed will help ensure protection of the natural environment, including native species, groundwater and vegetation, for the long-term, Environment Minister Tony Burke said in a statement on Monday.
With these conditions I am confident the Olympic Dam mine can progress in accordance with world best-practice in environmental protection and management.
URANIUM PRODUCTION TO SOAR
Once fully expanded, the Olympic Dam mine would be on near-par with the massive copper lodes of South America, though
it would take years before it came close to matching the copper production of BHP's giant Escondida lode in Chile.
It would also lift annual production of uranium from around 4,000 tonnes now to 19,000, more than is produced each year in all of Kazakhstan, the world's top producer.
BHP Billiton has yet to reveal the cost of the expansion, but analysts rank it as possibly the single biggest on the drawing board of the world's biggest miner, estimating costs of between $20 billion and $30 billion.
The project would require assembling one of the world's largest fleet of earth movers, with geologists estimating that it would take four or five years just to expose the ore body.
The expansion would also extend the life of the mine from about 20 years to more than 100 years.
Demand for refined copper in China has been increasing due to rapid development in telecommunications, power, equipment manufacturing, automobiles, construction and consumer goods.
Chile is currently the largest producer of mined copper, followed by other major producers such as Peru, the United States and Australia.
The South Australia state government also gave its environmental approval to the project on Monday and said it aimed to finalize an agreement on royalties and infrastructure commitments for the expansion by October 20.
I anticipate an agreement can be reached soon, Tom Koutsantonis, the state's minister for mineral resources development, said in a statement, adding that would allow state parliament to pass legislation on it by December.
Monday's key clearances follow a six-year review of the expected impact of the expansion on everything from air quality in neighboring towns to cuttlefish in the Spencer Gulf, and sets 150 conditions BHP must meet to protect the environment.
The company will need more than 600 licenses and permits to meet these requirements.
BHP Billiton will also be allowed to expand its smelter, build a concentrator and other plants to process the additional ore and dump waste rock in a 150-meter high pile covering 67 square km (26 square miles).
The plan also includes a new airport, a new gas-fired power station, a 320-kilometre pipeline and a 105-km rail line.
The company has said it would put the project up for board approval in stages, with phase one, digging the open pit, up for a sign-off around June 2012 and phase two, including building the concentrator, up for approval 18 months to two years later.
BHP shares slipped 0.3 percent on Monday, underperforming a 0.9 percent gain in the broader market.
(Editing by Mark Bendeich)