Olympic Dam is the world’s most valuable mineral deposit and will go close to being the world’s biggest start-up mining development. The enormous scale is revealed in the Olympic Dam environmental statement, which shows where BHP will spend $30 billion to access the ore.
BHP’s uranium president Dean Dalla Valle reveals that the giant ore body is in the shape of a frying pan, with the current underground mine taking ore from the “handle” and the open pit mine based on what is the “pan” of the ore body.
While all the sums in the environmental statement are based on a 40-year Olympic Dam life, that “pan” has in fact a 100-year life. BHP will spend six years — yes, six years — removing the overburden to access the “pan”.
In all it will remove a 350-metre thick layer of overburden and the rock taken out will be transported to a rock storage facility that covers 6720 hectares and will eventually be 150 metres high. By 2050, when the mine has not even completed half its life, the pit will be 4.1 kilometres long, 3.5 kilometres wide and one kilometre deep.
While BHP is removing the overburden and after the open cut starts it will continue to exploit the existing underground mine.
The world is worried about the future of nuclear, but BHP appears to have has no such concerns, and has produced a remarkable set of maps and tables that show that currently there are 439 nuclear reactors in operation. Dalla Valle says that he expects the number to rise to 793 by 2030 — just under 20 years.
Those 793 reactors will require about 92,000 tonnes of uranium, according to Dalla Valle. BHP will be producing 15,000 tonnes from the open pit and 4000 tonnes from the underground mine — a total of 19,000 — and will be the world’s biggest supplier. Dalla Valle says that, despite the 19,000-tonne Olympic Dam uranium output, on his present estimates there will be a shortfall of an incredible 50,721 tonnes of uranium oxide on the basis of present and planned output.
If he is right, the price of uranium will go through the roof unless more Olympic Dams are discovered and developed.
BHP expects the price of uranium to take off towards the end of this decade — just when that open pit mine is starting to ramp up. Of course, the mine’s most important revenue driver during the development years will still be copper and Olympic Dam will produce copper concentrates containing 515,000 tonnes of copper metal a year.
Ore from the underground mine is converted to copper metal and there was great pressure on BHP to do the same with open pit ore. BHP has opted for a copper concentrate that includes uranium, gold and silver, which will be railed up through Alice Springs to Darwin. The tailings from producing the concentrate will be rich in uranium but also include copper, gold and silver. The uranium will be extracted from the tailings via a hydrometallurgical plant and there are many other support facilities required, including a desalination plant.
South Australia will be transformed into a boom state. Olympic Dam joins the Pilbara iron ore, North West Shelf gas shelf and Queensland gas and coal basins as a source of great future national wealth.
Western Mining Corporation discovered the handle of the deposit, but was only just discovering the pan when it sold it to BHP for a fraction of what Olympic Dam was worth. Acquisition of resources at low prices has been a key to BHP growth. BHP acquired its Mount Newman iron ore from CSR and others and coal and Chilean copper from Utah. But Olympic Dam looks like being the greatest bargain of them all.
*This first appeared on Business Spectator.