#Official Mining Thread

[rhino]

where does it refer to ODX?

It doesn't. My point exactly.

[rhino]

From today's Adelaide Now:

Beach makes new oil discovery in SA

OIL and gas explorer and producer Beach Petroleum Ltd says it has made a new oil discovery in South Australia's Cooper-Eromanga Basin.
The Perlubie-1 exploration well in the PEL 92 permit will be cased and suspended as an oil producer, and tied-in through Beach Petroleum's Parsons oil field facilities in the same permit, which commenced production in June last year.
The Parsons field helped the company to achieve record oil production during the December quarter.
Beach Petroleum is the operator of the PEL 92 permit with a 75 per cent stake while Cooper Energy Ltd holds the remaining 25 per cent interest.

[frank1]

where does it refer to ODX?

It doesn't. My point exactly.

Do you think that is good news or bad news i.e. swept under the rug?

[Wayno]

Do you think that is good news or bad news i.e. swept under the rug?

lol - it would have to be a bloody big rug!

ODX is too important for BHP's future income/growth to be swept away, or even (in my personal opinion) substantially deferred. We can but wait...

[joshzxzx]

ROXBY PROJECT WILL GO AHEAD

CHRISTOPHER RUSSELL
February 05, 2009 12:01am

A BIG fall in profit reported by BHP Billiton yesterday is not expected to harm the prospects for the Olympic Dam expansion, analysts say.

With the cost of its failed bid for Rio Tinto, mine closures and lower commodity prices dragging down the result, BHP made a net profit of $4.1 billion in the half-year to December, down 57 per cent on December, 2007.

"We, like all – or most other people – did not see the speed or the dramatic nature of the downturn that has occurred," BHP Billiton chief executive Marius Kloppers said.

The company has responded to the weak economic situation by cutting jobs – including 200 working on expanding the Olympic Dam copper, uranium and gold mine at Roxby Downs – and reducing production.

But Olympic Dam, as one of the company's most lucrative assets, is not expected to be under threat.

"Olympic Dam is a mature asset," Bell Potter Securities state manager Ashley Kelly said. "Olympic Dam is such a high-quality, low-cost, long-duration operation that I don't think you could be negative about it."

In its report, BHP Billiton stated the global economy had deteriorated at an unprecedented rate and expected conditions to be weak in the short to medium term.

"However, in the long term, we expect strong growth in demand for commodities from China and other emerging economies."

Once demand returned, commodity prices would rise quickly. Supply would diminish because some companies were curtailing capital investment now.

Tolhurst state manager Brian Dunn said BHP wanted to be in a good position once demand returned because first movers would be winners.

"They have said they want to continue to invest in the down cycle – either by expansion or acquisition," he said. "I'd imagine Olympic Dam forms part of that."

Mr Kloppers gave no indication of any change in timetable for Olympic Dam.

[raulduke]

Interesting - so Kloppers did not say it will go ahead, he just did not mention it at all.

And the only people who say that it will are 'analysts'

[skyliner]

where does it refer to ODX?

It doesn't. My point exactly.

Do you think that is good news or bad news i.e. swept under the rug?

I read a very similar article in AFR yesterday - no mention of ODX. All very interesting indeed, to say theleast!Will just have to wait and see.Eg Josh ZXZX comment.

SA - STATE ON THE MOVE

[rhino]

Missed this article from a few days ago. Australian Zircon has a mine at Mindarie in the Mallee. They send a train of containerized zircon to Port Adelaide about once a week.

Australian Zircon gets approval for Austria's DCM to take control
VALERINA CHANGARATHIL
January 30, 2009 11:00am

SA-BASED Australian Zircon won a crucial shareholder approval yesterday for Austrian company DCM DECOmetal to take control of the mineral sands miner.
The deal gives Australian Zircon funds to finish a ramp-up of operations at its Mindarie mine in SA's east, and achieve sustainable positive cash flow by the end of March.
The investment - deemed crucial to the firm's survival and found to be ``not fair but reasonable'' by an independent expert - will see DCM own 69 per cent stake in the firm via a $40 million debt-for-equity swap and capital injection at 4c a share.
DCM has advanced about $30 million to Australian Zircon with the rest to come in next week, acting chief executive Marty Adams said.
"We were fairly optimistic about the approval, and DCM's investment strengthens our balance sheet significantly,'' Mr Adams said.
A show of hands at the shareholder meeting won Australian Zircon the approval. Of the proxy votes, more than 175 million were in favour of the deal and 1 million against.
DCM representative and finance director Thomas Styblo, who was present at the meeting, will remain in Adelaide until share transactions are complete next week.
DCM's stake in the firm will be lowered to 57 per cent if shareholders take up a one-for-one rights issue, which closes on February 6.

[Wayno]

The ODX EIS is due to be released shortly, with much ado expected about the impact of a desal plant on the Point Lowly cuttlefish population.

Awww, they are such cute critters (not!)

cuttlefish.jpg (70.43 KiB) Viewed 2310 times

Here's where the desal plant will be:

odx-desal-site.JPG (45.99 KiB) Viewed 2310 times

Lots of infrastructure projects planned at Point Lowly:

point-lowly-projects.jpg (58.5 KiB) Viewed 2307 times

Reading between the lines, the looong article below goes like this - with a bit of artistic license

• * BHP says "there's no ODX expansion without 185 megalitres of fresh water a day"
  * Environmentalists say "A desal plant at Pt Lowly is ecologically risky"
  * BHP says "it's all cool, don't worry"
  * Scientists say "we have determined the level of brine concentration at which cuttlefish breeding fails"
  * Environmentalists say "well that's it then - you can't do it"
  * BHP then makes a raspberry sound at the environmentalists, looks nonchalent/innocent when they turn to stare, and say "well obviously we won't go ahead if ODX will be labelled ecologically irresponsible"
  * Foley says "yeah but - it'll be 9% of our 'economy', which sort of sounds like 'ecology'"
  * Kloppers says "did i mention we'll give 65megalitres of potable water to the local community?"
  * Foley jumps up, gives himself a high-5, and everyone stares in disbelief
  * BHP says "the effect of discharged brine at Pt Lowly is trivial in comparison to the impact of ocean evaporation, which has been occurring ever since adam was around"
  * The Environmentalists sigh in unison
  * Foley smirks like noone else can

To be fair, Foley is not even mentioned in the article below, but i could not help including him in my abridged storyline

http://www.adelaidereview.com.au/featur ... =&ucat=16&

Progress and the cuttlefish

The importance of the Olympic Dam development to South Australia’s future can hardly be overstated. It is, by any measure, a project of Olympian proportions.

The five stage expansion of the mine, according to a report by Deloitte, will boost the state’s economy by 9 per cent by 2040. Already, 4000 people are employed there and the project will need another 6500 or so workers during the construction phase, and another 4500 permanent workers by 2021. Treasurer Kevin Foley has estimated the mine could generate as many as 25,000 direct and indirect jobs over the next decade.

Roxby Downs, already one of the richest postcodes in Australia, will more than double in size and become one of the state’s most significant towns. The whole project will create the biggest man-made hole on the planet and have an economic life of around 150 years – almost as long as the state’s post-European history thus far.

This is the world’s largest uranium deposit, the fourth-largest copper deposit and the fifth-largest known reserve of gold. It is already a popular myth that the mine will be visible from space.

There is, however, a slight caveat to all that upside, a potential Achilles heel to the Olympic dream. To operate the mine BHP Billiton will need water, lots of it, around 185 megalitres a day. The current mine already uses 14 megalitres a day from locally sourced groundwater, but that source is inadequate for what will ultimately be needed. The proposed solution is a desalination plant at Point Lowly on the western coast of Spencer Gulf.

The Point Lowly option is a similar solution to the one the company is proposing for its other huge mine, Escondida, in northern Chile. There, BHP plans to build two 180 kilometre pipelines to carry water from the Pacific Ocean to the mine in Chile’s Atacama Desert, a region where some patches of earth have never, ever, seen rain.

If there’s no water, there’s no major development at Olympic Dam, it’s as simple as that. And not everybody thinks that the preferred option at Point Lowly is the best idea, or even a good one. Pumping large quantities of brine, the by-product of the plant, into Spencer Gulf could disturb a fragile eco-system. The extreme rhetoric warns that the Gulf, one of our most remarkable marine resources, could become a ‘dead sea’.

Suddenly we have learnt of the giant marine cuttlefish, and its breeding grounds in the gulf. Could the mating habits of a rare cuttlefish stand in the way of our economic development?

Associate Professor Bronwyn Gillanders, from the University of Adelaide, has been studying the giant australian cuttlefish for several years and her work has been fed into the EIS process. She says the cuttlefish breed right there at Point Lowly, which is the “only known breeding aggregation of these cuttlefish in the world”.

“We’ve taken the eggs from that Point Lowly site and raised them in different concentrations of brine, which comes from a much smaller desalination plant,” she says.

“Our salinities go up to around 55 parts per 1000 and normal seawater is around 35 to 40, and what we see if that as soon as you get above 40 parts per thousand you begin to see a decrease in the survival of the eggs.

“So at 39-40 parts per thousand you’ve got all the eggs essentially hatching out and surviving, at 45 it drops off and at 50 parts per thousand we are seeing total mortality of the eggs.”

Gillanders says that Point Lowly could have “potentially an even higher concentration.”

“The issue is whether it dissipates back to background levels and at what distance it does that, because if it doesn’t do that relatively quickly there is an impact on breeding,” she says.

“But it also depends on how well the water is flushed in and out of the Gulf as well, and whether there is potential for the salinity of the gulf to increase over time.”

Another issue for the cuttlefish, she says, is their breeding frequency.

“You’ve got to remember that these cuttlefish breed once and then they die,” says Gillanders.

“We are talking about a species which is much more susceptible to environmental impact than says a finned fish like snapper.”

More will be known when the Environmental Impact Statement for the Olympic Dam project is released in the next few months. It has been a mammoth undertaking, the largest study of its kind ever undertaken in this state, and so it should be. The plant represents the most significant impact humans have yet made on the local marine environment. There’s a lot at stake here.

For BHP Billiton, the issue of the desalination plant is also a crucial one not only in terms of the mine’s technical operation but also the company’s corporate reputation. The company is highly aware that it needs to get all aspects of such a high profile project right and that these days, the investment community demands the highest level of corporate social responsibility. There’s no point in spending upwards of $5 billion on a project if it becomes a byword for environmental irresponsibility. In the 21st century, that translates through to the share price. Everything needs to be as rigorous as possible.

Richard Yeeles, BHP Billiton’s corporate spokesperson, expanded on the desalination plant issue in a statement to the Environment, Resources and Development Committee of State Parliament in October last year. In advance of the release of the EIS, it is the most comprehensive explanation we have so far of the work the company has done on the desalination option.

Yeeles said that other options considered included taking water from the Great Artesian Basin near Olympic Dam, surface water from the Murray River, and even barging freshwater from Tasmania.

The desalination plant, he said, was chosen over those options for several reasons. It would not compete with existing water supplies and would create a new supply option for the region, with 65 megalitres a day for use by the local population.

Taking more water from the Great Artesian Basin was impractical, because the wellfield which would have been built would have delivered water too hot for mine use. Adelaide’s treated waste water was also considered, but it was of variable quality. That water, Yeeles said, could also be needed in Adelaide at some future time.
Yeeles told the committee the plant would require 40 hectares of land at Point Lowly, chosen over other sites with environmental objectives, such as the rapid dilution of the return water, in mind. A 320 kilometre pipeline would take the water to Olympic Dam, buried for the entire length “except for about 1.5 kilometres where it would intersect watercourses.” The intake pipe for the plant would be established more than 250 metres, with the outfall pipe more than 600 metres offshore.

“The return water would be discharged through a specially designed diffuser where it would be mixed with the ambient seawater by the strong currents and high-energy environment of Point Lowly,” said Yeeles.

“The return water would be a combination of brine (which is about twice as salty as seawater) and small quantities of anti-scalant chemical used to prevent scale accumulating on the membranes of the plant.”

On the marine environment, Yeeles said BHP’s research had found that tidal currents in the gulf were particularly strong around Point Lowly, contributing to the dispersal of the brine. The company has also compared the impact of natural evaporation and desalination on salinity, using data from the Bureau of Meteorology.

“The comparison indicated that the natural evaporation contributes more to the elevated salinity in Spencer Gulf than the desalination output would, by a factor of 318,” Yeeles said.

“In other words, return water discharge from a desalination plant 318 times the size of the one proposed for Point Lowly would generate the same salinity increase in Spencer Gulf as the natural salinity increased caused by evaporation.”

And finally, this confident assertion: “We can say with confidence, based on the work undertaken so far, that the desalination plant can be designed and constructed so that it would not have any adverse impact on the general marine environment, cuttlefish, commercial fisheries and aquaculture, and recreational fisheries.”

We have only a few months to wait to see if the EIS comes to the same conclusion.

[Norman]

http://www.sensational-adelaide.com/for ... =12&t=1972

[rhino]

Loved your synopsis Wayno! Two thumbs up!

[UrbanSG]

From adelaidenow:

Olympic Dam chief Graeme Hunt exits
CAMERON ENGLAND, CHIEF BUSINESS REPORTER
February 15, 2009 11:30pm

BHP Billiton's number one man in South Australia, Graeme Hunt, will part ways with the company as the focus on the Olympic Dam expansion project begins to tail off.

Mr Hunt - the president of BHP's uranium customer sector group and the man overseeing the Olympic Dam expansion team - will leave the company at the end of next month by mutual agreement.

It is a major blow for Adelaide's status within the company, with the decision removing the head of a BHP business division from the state.

The decision follows the sacking of about 200 Adelaide-based staff in January, as part of 6000 lay-offs worldwide.

The Olympic Dam expansion team is believed to be down to levels of 30-60 people, compared with as many as 300 at its peak.

In an internal letter to staff obtained by The Advertiser yesterday, BHP chief executive Marius Kloppers said the organisational structure of the uranium customer sector group, headed by Mr Hunt, had been reassessed in light of the prevailing economic conditions.

Mr Hunt's role was becoming increasingly obsolete as the environmental impact statement (EIS) for the Olympic Dam expansion project had been submitted to the state and federal governments, and the future timing of the project now lay in their hands in the near term.

The EIS is expected to be released for public consultation in May.

The government approvals process is expected to take 12-18 months, after which the BHP board will be in a position to make an investment decision on the multi-billion dollar project.

Mr Kloppers, in his letter to staff, said the uranium business would be folded into the non-ferrous portfolio.

Uranium was previously part of the Australian base metals division, which was based in Adelaide from 2005, before being allocated its own Melbourne-based development group in July 2007.

"These changes will include the departure of Graeme Hunt who has led the work at both Olympic Dam and the Olympic Dam Expansion Project since July 2007,'' the letter says.

"Going forward the uranium business will form part of the non-ferrous portfolio of businesses led by Andrew Mackenzie.''

Mr Hunt has worked at BHP for 34 years and has, at times, led the manganese, iron ore, aluminium and uranium businesses.

He could not be contacted yesterday.

In reporting BHP Billiton's $US2.6 billion ($3.9 billion) half-year profit, Mr Kloppers was asked if there were any delays to expanding Olympic Dam.

He said there was no change to the schedule but the company was ``throttling back the burn rate'' of cash because it largely had completed its studies and would enter a waiting phase as the EIS was published and assessed.

Taylor Collison resources analyst Andrew Shearer said the government approvals process on the EIS would give BHP time to assess the expansion project.

[Wayno]

China expected to own Prominent Hill

I'm sure there will be a fuss about this, but i think it's ok. Pending fed govt approvals, it appears China may own one of South Australia's largest copper/gold mines. Profits will go offshore, but we'll be better assured of jobs and royalty cash flows through economic peaks and troughs. Even if BHP bought Prominent Hill, i believe it's majority owned by non-australian investors - so it's kind of a moot point.

http://www.news.com.au/adelaidenow/stor ... 55,00.html

SOUTH Australia's newest billion dollar mine would be sold to the Chinese under a takeover bid for the mine's owner, Oz Minerals.

The Prominent Hill copper and gold mine 130km southeast of Coober Pedy is scheduled to start production within days, following an investment of about $1.15 billion by its beleaguered owner.

But the profits could all flow offshore if a $2.6 billion takeover by Chinese Government-owned company Minmetals, announced today, is successful.

It is the latest in an ongoing push by Chinese companies to buy up Australian mineral resources, following Chinalco's recently-announced $US19.5 billion plan to buy up to 18 per cent of Rio Tinto, including stakes in a number of the miner's copper, aluminium and iron ore assets.

The Oz Minerals takeover will require approval from Federal Treasurer Wayne Swan and the Foreign Investment Review Board. It also requires Department of Defence approval because Prominent Hill is within the Woomera Prohibited Area.

Oz Minerals has been scrambling to refinance $1.25 billion in debt by the end of this month, and the company's shares have been suspended from trade since late November.

The company has been trying to sell assets and renegotiate its debt, and was known to be talking to BHP Billiton about a possible Prominent Hill deal.

The Chinese firm has trumped those talks, offering shareholders 82.5c per share for their Oz Minerals shares.

This is well above the 55c the shares have been frozen at since November 28, but is a far cry from the $3.97 per share the stock hit in late February last year.

Oz Minerals chief executive Andrew Michelmore said the company had come "very close'' to placing itself in receivership.

"After careful consideration of multiple options by the board we consider this (the takeover deal) is the best outcome available in the circumstances,'' Mr Michelmore said.

"This transaction would secure the operating future of the company and allow us to go back to the business of mining.

"Oz Minerals would continue to be headquartered in Australia, and our assets will remain in operation, be expanded and developed, and high value jobs and support-based businesses will be maintained.''

Mr Michelmore could not specify how many jobs could go under the deal, but said there were some head-office functions which would no longer be needed.

Oz Minerals was formed out of the merger of Oxiana and Zinifex last year and rapidly ran into problems with debt.

This has resulted in mine closures, project deferrals and asset sales.

When the merger was announced in March last year, the combined value of the companies was $12 billion, compared with the $2.6 billion offered in the takeover bid.

Shareholders will vote on the proposal at a meeting in May.

[Wayno]

Prominent Hill starts operating today!

i'm excited, and soon must lye down for a rest.

THE $1.15 billion Prominent Hill copper and gold mine in the State's north has started production, providing a ray of hope for the beleagured industry.

Unfortunately for the mine's owner, Oz Minerals, it may not have long to enjoy its success, with a foreign takeover or receivership the likely destiny for the company in the short term.

Whatever the fate of Oz Minerals, the start of production at Prominent Hill is good for South Australia. Even if the company was to fail, it is unlikely that such a premium mine would fail to attract a buyer.

It is expected to produce up to 100,000 tonnes of copper and 70,000 ounces of gold this year, and could run until 2030, depending on the feasibility of undergound mining at the site. Its production will add up to $627 million to the State's exports this year, based on yesterday's metals prices.

Prominent Hill is the jewel in the Oz Minerals crown. The copper grades are good by world standards, the mine has been brought into production in close to, if not, record time, and it is likely to generate good cash flow.

The broader company does not enjoy such robust fundamentals.

Tomorrow is D-Day for Oz Minerals, which is due to report its 2008 financial results.

It faces being placed in receivership as early as today if it cannot convince a consortium of banks to yet again extend its repayment schedule on more than $1 billion worth of debt.

The company was formed from the merger of Oxiana and Zinifex in the middle of last year.
Its value has dwindled from $12 billion when the merger was announced in March, to just $1.75 billion today.

By some analysts' count, this is less than the Prominent Hill mine alone is worth.

Oz Minerals has been handed a lifeline of sorts however.

Chinese Government-owned company Minmetals has offered to buy the company for $2.6 billion, plus pay off its outstanding debts.

Share market investors do not seem confident the deal will go ahead.

While Minmetals is offering 82.5c per share for the company, Oz Minerals shares closed at just 56c.

There are some stumbling blocks in the way of the merger.

It must be approved by the Foreign Investment Review Board, and by Treasurer Wayne Swan, who can decide not to approve the deal if it is not in the national interest.

[UrbanSG]

From the Independent Weekly:

Olympic Dam impact study under wraps
HENDRIK GOUT
28/02/2009 4:00:00 AM

The long-awaited study into the environmental effects of what will be the world’s biggest copper and uranium mine, BHP Billiton’s massive Olympic Dam expansion near Roxby Downs in the state’s far north, is finally complete. But the public can’t see it.

The environmental impact statement won’t be released until May 1, according to Mines Minister Paul Holloway – and South Australians will have just eight weeks to make a response.

The EIS is as impressively huge as the mine itself. According to Mr Holloway, the statement is “the largest document ever prepared in this state”. It takes 110 pages just to list its guidelines.

“The first part was to do with the issues that relate to the mineral lease area which of course is the mine at Olympic Dam, the processing plant expansion, the township of Roxby Downs and so on. The other issues that need to be addressed are power, water and transport,” Mr Holloway said.

“If someone is concerned about issues such as the impact of the desalination plant on Upper Spencer Gulf, there will be this huge document about the entire mine and all the associated issues.”

Mr Holloway said eight weeks of public consultation was enough. The EIS has taken almost three years to prepare.

The Olympic Dam mine will produce, on some estimates, 30,000 tonnes of uranium oxide, half a million ounces of gold, and one million tonnes of copper a year. This means the resource is worth more than $1 trillion.

“We’re talking about a 200-year mine,” Premier Mike Rann believes, “with benefits that are astonishing. It’s going to mean a huge amount in terms of royalties and an even bigger amount in terms of economic benefit for the state.”

BHP Billiton is likely to become the biggest resource company the world has ever seen. The company needs enormous water resources for the Olympic Dam expansion, and has proposed a $350 million desalination plant near Point Lowly on the Upper Spencer Gulf. It will discharge hypersaline water into the Upper Spencer Gulf, raising concerns about its fragile marine ecology.

While the minister says the report is “being printed at the moment”, he says the timing of its release is up to BHP Billiton.

“Given the size of it and the need to proof-read it, I believe that it will take most of the next two and a bit months to ensure the document is ready for release,” Mr Holloway said last week.

Greens MLC Mark Parnell is furious.

“The team at BHP Billiton will take two and a bit months just to proof read this massive document,” he said.

“Does the minister think that it is acceptable for the SA public to have significantly less than that to find a copy, read and analyse it and then write a formal submission?

“This is the largest project in the state’s history, set to become the largest open cut mine in the world and a project that has the potential to use, for example, half of the state’s electricity. Why are only 40 working days being provided for public consultation?

“The public was given longer to have its say on changes to caravan park zoning and a new shopping centre in Victor Harbor than for the biggest development by far in SA’s history.”

A search through government records appears to show Mr Parnell’s claims are correct. The Encounter Bay shopping centre had a nine-week public consultation period, the caravan park zoning ten weeks, and the Victoria Park grandstand and Port Augusta draft structure plan three months each.

“The SA Government has had the EIS since Christmas. What’s the point of public consultation if it is so rushed that no-one can properly respond? It’s insulting to the many experts in SA interested in this project,” Mr Parnell said.

Mr Holloway sees no reason for concern.

“I would expect that (the fishing industry) would be able to draft its response within that two-month period,” he said.

Liberal MLC Caroline Schaefer was unconvinced. “How can the industry can prepare itself to comment on an EIS that it has not seen?” she asked.

“Presumably they will do their homework and will know exactly what they will be looking for, in terms of whether the EIS adequately addresses any increase in salinity, and so on,” Mr Holloway replied. “I assume they will have done their work to know what impact is tolerable and what is not.”