He who Holds the Gold & Silver Makes the Rules

BHP Billiton’s president of uranium and Olympic Dam development, Graeme Hunt, speaking at the at the American Chamber of Commerce in Adelaide on Friday said that the company had abandoned it’s plans to build a new smelter as part of the long awaited expansion proposal at the BHP Olympic Dam mine site in the far north of South Australia.

South Australia’s Premier Mike Rann had previously, strongly opposed BHP’s plans to send copper concentrate overseas for processing as it would deprive job opportunities to South Australians.

Graham Hunt was quoted as stating that on-site smelting has a high capital cost and increases project execution risk, particularly in the isolated area in which Olympic Dam is established. A smelter would add little value to the product.

Despite the government wanting as much processing to occur locally, the announcement did not come as a surprise.

Mr. Hunt further justified releasing news of the abandoned smelter proposal as it being the “copper industry norm” to sell concentrate to the international copper concentrate smelting market. Following that, “there is a world-wide trend” where modern base metal mining projects and operations are not integrated with smelters.

In compensation, Mr. Hunt added that BHP would be building major new infrastructure including a desalination plant, “possibly” an on-site gas-fired power station as well as a railway and urged stakeholders to be patient for news on the proposed expansion of Olympic Dam saying that the environmental approval process would carry through next year with results of the environmental impact statement “likely” to be announced in the first few months of 2010.

The next state elections are scheduled for March 2010.