#Official Mining Thread

[UrbanSG]

The government can talk about other mining projects and BHP can talk about a scaled down version of OD. They aren't enough for SA.

We really needed a significant development to lift our economy.

Thankfully we are not in a drought now too as the agricultural sector is doing well. If that was sufferring as well we would be stuffed.

I think a few CBD projects will definitely been in doubt now.

[Waewick]

It is really quite depressing to be honest.

for me, in my industry (not mining) I'm questioning why I'm hanging around to be honest - I can't see much growth in SA for a while.

[crawf]

Extremely depressing news but lets not forget some of these developments are not being spured by Olympic Dam. Majority of hotel and residential developments are due to the increasing investment around the Riverbank, eg Adelaide Oval, Convention Centre.

But still

[Waewick]

Extremely depressing news but lets not forget some of these developments are not being spured by Olympic Dam. Majority of hotel and residential developments are due to the increasing investment around the Riverbank, eg Adelaide Oval, Convention Centre.

But still

but based on economic growth driven by the "mining boom"

[cruel_world00]

Can anyone spin this positively at all... please?

[crawf]

Extremely depressing news but lets not forget some of these developments are not being spured by Olympic Dam. Majority of hotel and residential developments are due to the increasing investment around the Riverbank, eg Adelaide Oval, Convention Centre.

But still

but based on economic growth driven by the "mining boom"

This article doesn't mention anything about a mining boom.

I think the biggest loser is going to be office developments.

[skyliner]

Just read the bad news. Felt like a blow in the gut. SA is in problems now. Speechless! Who knows how many city developments are dependant on this.

ADELAIDE - TOWARDS A GREATER CITY SKYLINE

[Wayno]

Hundreds of ODX newspaper stories on the web, many sensationalist, and most probably derivative of other news stories. The BEST source for reliable ODX news is the BHP website. Note how they start their announcement (and please read in full):

BHP Billiton announced today that it will investigate an alternative, less capital-intensive design of the Olympic Dam open-pit expansion, involving new technologies, to substantially improve the economics of the project. As a result it will not be ready to approve an expansion of Olympic Dam before the Indenture agreement deadline of 15 December 2012. The Company will discuss the implications of this decision for the Indenture agreement with the South Australian Government in the coming months.

BHP Billiton CEO, Marius Kloppers, said current market conditions, including subdued commodity prices and higher capital costs, had led to the decision:

“As we finalised all the details of the project in the context of current market conditions, our strategy and capital management priorities, it became clear that the right decision for the Company and its shareholders was to continue studies to develop a less capital intensive option to replace the underground mine at Olympic Dam.

“As with any capital commitment, all investment options are scrutinised as they move through our approvals process and our highest returning projects are prioritised. Value is always our primary consideration. We believe today’s decision reflects an appropriate, prudent and disciplined course of action.

"However, the long term outlook for the copper market remains strong and we will continue to work closely with all stakeholders as we refine our longer term development plans for this unique, world class ore body. We want to find the right solution to unlock this resource,” he said.

BHP Billiton Chief Executive Non-Ferrous, Andrew Mackenzie, said the South Australian Government’s support for the project should be commended:

“The South Australian Government has been fully supportive of Olympic Dam and has created an environment that is highly conducive to business investment. We have been very much encouraged by their attitude to business development and the Olympic Dam expansion project.

“Olympic Dam is a resource of enormous potential and we will continue to work on technological and design alternatives that have the potential to substantially improve the economics of the expansion, while also completing some early stage site works.”

As a result of this change, the Company will recognise impairment and other charges of US$346 million before tax (US$242 million after tax) in respect of the Olympic Dam Project in the 2012 financial year.

The first paragraph sums it up. BHP is well known for saying what they mean, and doing what they say. Sure plans can change, as we have just experienced, but for reasons beyond their control.

This is obviously crappy short-term news, however as I recently predicted BHP is continuing with site preparation work (e.g. start overburden removal). How many news articles pointed out this fact? a few of the quality ones did - but not those most Aussies read.

I'm also intrigued by the notion of new technology changing the economics of the project. I'll see what i can find out.

The other thing worthy of note is BHP did not blame the mining tax. If it was a driving factor then they would have said so. Regardless we can expect several week of sensational comments by various public figures.

[Nathan]

Unfortunately, the doom and gloom ranting in the media will do a fine job of driving down business confidence way more than is necessary. A self-fulfilling prophecy this way comes.

[Will]

Unfortunately, the doom and gloom ranting in the media will do a fine job of driving down business confidence way more than is necessary. A self-fulfilling prophecy this way comes.

Unfortunately, this time, the media will be correct.

Olympic dam was going to be the economic saviour of this state. Now that it is cancelled, all we have to look forward to is more mediocrity.

It is not just the rest of Australia which hates us, bit it also appears that the gods do aswell. Everytime, we are about to get a chance, something comes along to f#ck it up.

[claybro]

Given the substantial support the state has given to BHP to move this project along, I think at least Mr Kloppers could have been front and centre with Jay, to explain what they mean by a less capital intensive project. May have defused some of the over the top media negativity, if in fact they are to continue with this expansion in any capacity. Although this is not not the majic wand to solve all our immediate woes, it may still develope into a more economically sustainable project, without the usual boom and bust cycle.

[ynotsfables]

Please excuse my ignorance on this topic, however if we have an abundance of wealth underground waiting to be mined, why do we have to rely on a company like BHP to mine it out of the ground for us. The resources are still all there, surely there should be alternatives in making it work for us, and a global demand for what we have?

[Waewick]

Please excuse my ignorance on this topic, however if we have an abundance of wealth underground waiting to be mined, why do we have to rely on a company like BHP to mine it out of the ground for us. The resources are still all there, surely there should be alternatives in making it work for us, and a global demand for what we have?

it comes down to the size of the mine and the capital investment required to get to the resources.

I get a lot of economic information as part of my job......everything I read bases any economic growth on the back of this mine expansion and the complimentary growth associated with it - I'm not trying to talk down other mines and there impacts, but without this mine going ahead SA is going nowhere.

[Will]

The more I dwell upon this decision the madder I become at BHP.

They have behaved just like the Japanese prior to Pearl Harbour. In secret they knew they were going to put a dagger through our heart but in public they continued to offer 'peace tokens'.

The state government should grow a pair and punish BHP. For every year the project is delayed, an extra 1% in royalty payments to the state. We must not allow big business to play games with our lives.

[claybro]

It costs many billions of dollars to build the infastructure required to build the mine to realise (long term ..decades) a return on the investment. Only mega large companys like BHP have the money to fund this. Even the government would go bunkrupt funding the mine related infastructure required. Any multi national company would do the sums and probably come up with the same answers.Thier immediate responsibility is not to us South Aussies but to their shareholders. Too big a hit in its current form in the this world ecomomic climate for a very distant profit.