Olympic Dam’s copper smelter is getting a $350 million upgrade. All images: BHP.
BY CAMERON DRUMMOND
AS it prepares to mine the “body of the guitar” at Olympic Dam – representing an incredible 70 per cent of the resource footprint – BHP is forging ahead with $600 million of expansions and upgrades.
Undeterred by an 18 per cent decrease in annual copper output due to state-wide power outages during September and October last year, BHP’s Olympic Dam is undergoing its biggest expansion and maintenance program since the Big Aussie purchased the mine from Western Mining Corporation in 2005.
In 2011, BHP released a supplementary Environmental Impact Statement into a gigantic open pit expansion at Olympic Dam.
Operating simultaneously with the existing underground mine, the planned open pit specs were truly immense; by 2050 the size of the pit would grow to be 4.1 kilometres long, 3.5 kilometres wide and 1 kilometre deep.
Exposing the upper surface of the orebody would take about six years of mining to remove the 350m thick layer of overburden, which would be relocated to an area eventually covering about 6,720 hectares.
The required infrastructure was similarly impressive. BHP had mapped out plans for a 200 megalitre per day coastal desalination plant and a 320km pipeline; a 270km electricity transmission line; a 105km rail line to connect Olympic Dam with the national rail network near Pimba; additional port facilities at Outer Harbor in South Australia and the Port of Darwin in the Northern Territory; and a new airport at Olympic Dam to cater for large commercial jets and the increase in passengers and air traffic.
The benefits to the State economy were expected to be substantial.
Then, the bad news. On August 2012 BHP put a pin in the open pit expansion, announcing that it would be investigating an alternative, “less capital intensive design” to improve the economics of the project.
Former BHP chief Marius Kloppers said market conditions, including subdued commodity prices and higher capital costs, had influenced the decision.
The decision meant impairments and other charges of $US346m before tax in FY2012.
“There is no doubt this is a major disappointment for South Australia and the nation, especially for those workers and businesses who had set themselves to work on the expansion project,” South Australian Premier Jay Weatherill said in an August 2012 statement.
“What I want to say to South Australians is that these resources are world class. They are still there.
They belong to us, and they will be developed.”
Then to now
In the last 4 years BHP has quietly spent $250m developing the high grade Southern Mining Area (SMA), the location of the proposed open pit shelved by the company in 2012 and the key to Olympic Dams future prosperity.
BHP began work on a SMA underground expansion in FY15, accelerating development in the last 12 months with a dedicated team of around 180.
BHP Olympic Dam general manager Troy Wilson has called SMA the future of the mine, or “the body of the guitar, given the shape of the orebody”.
“Incredibly, since 1988 only the Northern area of Olympic Dam has been mined – or the neck of the guitar – which means a massive 70 per cent of the resource footprint is still available to be mined,” he told Copper to the World conference delegates in June.
“After nearly 12 months of development preparation, Olympic Dam looks forward to celebrating the first production ore from the SMA very soon.”
A major $350m smelter maintenance campaign from August to November this year will including a rebuild of the electric slag furnace, the flash furnace and the electro static precipitator.
The resulting shutdown would be lower copper volumes of 150,000 tonnes (t) in FY18, but the medium to long term result would be a substantial boost to output.
BHP announced this $350m upgrade to Olympic Dam’s copper smelter in July, however the miner decided to up that figure to $600m and include a total of 49 projects at the site.
Speaking at the American Chamber of Commerce event in Adelaide on 4 August, BHP Olympic Dam asset president Jacqui McGill said the decision represented the most significant investment BHP had ever made into South Australian operations.
“…these investments – in our underground infrastructure and above ground processing operations – will help us build the foundations for long term, safe, stable and sustainable growth at Olympic Dam,” Ms McGill said.
“The investment will ensure the operation is more modern, reliable and can support processing of additional tonnes in coming financial years.”
Ms McGill highlighted Olympic Dam had more programs of work in execution this financial year than any other BHP operation in Australia.
“Forty of these projects are being supported by BHP’s new functional-regional model, which means Olympic Dam can draw on the incredible expertise within BHP’s Minerals Australia projects team,” she said.
The capital investment was to be apportioned over three key areas at the project.
About 20 per cent of the investment would support the underground expansion into the high-grade Southern Mine Area; including additional fleet, telecommunications, raise bores, power and other services.
Nearly 40 per cent would underpin further underground development in the existing Northern Mine Area footprint.
Finally, more than 40 per cent would be directed to a wide range of infrastructure and other programs onsite; including the major $350m smelter construction campaign.
The smelter campaign involves a combined investment in three key areas: a rebuild of the smelter flash furnace, demolition and construction of a new electric slag furnace; and the removal and replacement of the five-story high electro static precipitator.
Olympic Dam asset president Jacqui McGill said the smelter maintenance campaign was the largest planned shutdown by BHP in South Australia.
“There will be 1300 contractors at Olympic Dam during the peak of construction as teams work around the clock to dismantle, rebuild and upgrade integral components of the facility,” she said.
“Work is underway on site with teams preparing to dismantle old infrastructure and starting to take delivery of more than 350 material loads to support the project.
“The rolling shutdown across the surface operations starts in August with the maintenance campaign running for more than 100 days in total.”
Once all work is completed, the improved operational performance would underpin an expected increase in copper production to about 215,000t in the 2019 financial year.
It would also provide a stable base for the potential to increase capacity to 280,000t in the 2022 financial year, the company stated.
On top of personnel required for the smelter campaign, Ms McGill said the company would require a further 250 personnel at any one time and was recruiting to make sure the best people were working with the team.
“In addition to leveraging the expertise of our BHP colleagues internally, we’re also boosting numbers in our Olympic Dam squad, so that we have a more diverse workforce that is representative of the communities in which we operate in,” she said.
“I’m proud that in the last 12 months, our recruitment of new female employees to join our team has increased by 20 per cent.
“And our recent efforts to renew our focus on effective contractor relationships has also been a success – through our Industry Capability Network Gateway online, we had a total of 226 submissions and 70 per cent of registrations new to Olympic Dam and more than 30 per cent were from South Australia.
“As always, the safety of our people and our contractors is paramount as we focus on this demanding and complex project which will help underpin stability and growth at Olympic Dam for many years to come.”