Mining giant BHP has shelved long-held plans for a $3.5 billion expansion of its Olympic Dam mine in South Australia.
Although BHP’s Olympic Dam gold, silver and uranium mine recorded its best performance in five years, the company said it had decided against proceeding with a brownfield expansion project of the asset after conducting more than 400 kilometres of drilling which has improved its knowledge of the ore body.
“This has provided challenges for the economics of the brownfield expansion project, and we have decided the optimal way forward for now is through targeted de-bottlenecking investments, plant upgrades and modernisation of our infrastructure,” BHP’s quarterly report said. “We will continue to study longer-term options for growth.”
Australia’s top miner on Tuesday posted a 7 per cent increase in output of iron ore, the country’s most valuable export, shipping 74 million tonnes of the steelmaking ingredient from its Western Australian operations and beating analysts’ expectations.
The Olympic Dam expansion project, which BHP said would cost up to $US2.5 billion ($3.5 billion), was proposed in 2017 and was hoped to significantly increase copper production. BHP had initially anticipated reaching an investment decision on the project this year.
Mining analysts on Tuesday described BHP’s quarterly operational performance as a “very solid start” to the 2021 financial year, beating analysts’ consensus forecasts across most commodities including iron ore, copper and petroleum.
“BHP posting another good quarter on the production side has them operating the most consistently of the majors for now, in our view,” Royal Bank of Canada analyst Tyler Broda said.
“We continue to believe that the mining sector is well positioned with a strong China continuing to underpin higher iron ore prices.”
Across BHP’s coal operations, Mr Broda said BHP continued to take a “wait-and-see” approach following the Chinese government’s latest coal import restrictions, which had led to customers seeking deferments of coal cargoes.
The import curbs, said to be targeting thermal coal and steelmaking coal, coincide with a souring of diplomatic relations between Canberra and Beijing this year over calls for a coronavirus inquiry. It is unclear whether the latest bans are aimed at all foreign coal as a way to boost China’s domestic coal industry, or at Australian coal in particular.
Providing a windfall to Australia’s top iron ore miners and the federal budget, the iron ore price has surged above $US120 a tonne this year amid resilient demand from Chinese steel mills and softer output from other exporting nations, such as Brazil, which has faced disruptions related to COVID-19.
Source: Thanks smh.com