#Official Mining Thread

[Brando]

I heard Tom K on the radio and he says WA gets approximately $1 Billion from it's 100+ mines and SA gets $200 Million from it's 18 mines. He also said there are another 30+ serious applications for mines in various stages of approval for SA.

[[Shuz]]

I heard Tom K on the radio and he says WA gets approximately $1 Billion from it's 100+ mines and SA gets $200 Million from it's 18 mines. He also said there are another 30+ serious applications for mines in various stages of approval for SA.

I'm curious to know what our $200m (per year, I'm assuming) in royalties are being spent on?

Good to hear that there's potential for 30+ more. That'd lift our royalties to $500m+ which would certainly cater for some much needed infrastructure.

[Wayno]

I'm curious to know what our $200m (per year, I'm assuming) in royalties are being spent on?

- same for speeding fines, the murray river levy, emergency services levy, blah. I presume most ends up in the general revenue bucket.

i believe about $100m is direct from royalties, the rest is company taxes, and various indirect benefits (e.g. mining employees spending their salaries).

[Wayno]

an interesting twist on ODX - tourism & water sports! we won't live to see it though...

http://www.heraldsun.com.au/business/ol ... 6164129974

BHP Billiton's Olympic Dam project, set to be the world's biggest mine, could have a second life as an outback tourist attraction when it closes.

As well as a giant open pit, the company will leave behind a small mountain of unused rocks and a large tailings storage facility which will need to be fenced off with warnings of the potential for radiation exposure.

Once mining stops in South Australia's north, the pit is expected to fill with rising groundwater, creating a vast outback lake that would be up to 350 metres deep. BHP Billiton says backfilling is not a feasible option and has suggested the SA government resume control of the pit and turn it into a managed tourist attraction.

It says the government would be responsible for building and maintaining viewing platforms and controlling access by tourists, students and scientists. It suggests the rock storage, where it will dump the "overburden" of surface rock and soil which will take about five years to remove, should be returned as crown land and could also be used for tourism.

The company says its metallurgical plant, where it will process copper ore, could become a research and education facility.

BHP Billiton's closure and rehabilitation plans for the Olympic Dam site are outlined in the SA government's development assessment for the company's $30 billion expansion of its existing underground operations.

[UrbanSG]

After years and years we are getting very close to actual work commencing ...

BHP approves $US1.2b for Olympic Dam
October 12, 2011 - 2:09PM
Sydney Morning Herald

Mining giant BHP Billiton has approved $US1.2 billion in pre-commitment capital for the first phase of the Olympic Dam mine expansion in South Australia.

The funding will allow the company to procure long-lead time items such as trucks and accommodation, and begin infrastructure development and early site works.

The majority of the pre-commitment capital is conditional on an indenture agreement being passed through the SA parliament.

[skyliner]

All this made the news over here in Bris - with the statement that Adelaide house prices will rise the fastest of all capitals in the next 5 years. In the same bulletin it said QLD experienced its first net loss in population on a yearly reference point since 1986 - it WAS rising at over 1000 per week. Interesting...floods, mining issues, high living expenses, cabon tax impact. This turnaround in one year. Likewise SA couls experience the same now - only in a positive direction. All good news for SA.

SA - GREAT STATE MATE

[UrbanSG]

BHP Billiton approves $1.2 bln to start work on giant copper and uranium mine
Mon, Oct 10 2011

* BHP earmarks $1.2 bln to start Olympic Dam copper mine expansion

* Most funding hinges on government agreements on development

* Final investment decision by BHP board more than 6 mths away

* Government sets 12-mth deadline for 1st phase development

* Royalty rate fixed for 45 years

By James Regan

SYDNEY, Oct 12 (Reuters) - BHP Billiton on Wednesday approved $1.2 billion in pre-commitment capital to start expansion work on its Olympic Dam copper and uranium mine, which analysts estimate could nearly cost 30 times that much to develop fully.

The funds will be used to buy trucks, build worker housing and for other items requiring lengthy lead times, it said.

BHP said it will not make a final decision to go ahead until mid-2012, after it weighs up the 150 environmental conditions imposed on the project by the national and South Australia state governments this week.

Once fully developed, Olympic Dam would almost be on par with the massive copper mines of South America, although it would take years before the mine came close to matching the output of BHP's giant Escondida lode in Chile.

"The Olympic Dam project team is completing studies to create one of the world's largest open pit mines, with the potential to increase copper production from around 180,000 tonnes per annum to 750,000 tonnes per annum and beyond," BHP Chief Executive Marius Kloppers said in a statement.

BHP has not given a total cost estimate for the project but analysts say it will need $20 billion to $30 billion to fully develop the lode.

ROYALTY PAYMENT

In a related development, BHP agreed to maintain a 5 percent royalty payment to the government of South Australia, home to the mine, for uranium and 3.5 percent for other metals after the expansion. The royalty rate is guaranteed for 45 years.

"BHP have sought with great vigour to get a reduction in royalties," South Australian minister Kevin Foley said in a statement.

Based on today's copper price, BHP would pay around $260 million a year in royalties on copper alone once the expansion is complete.

The agreement was signed by Kloppers and South Australia leader Mike Rann in Melbourne on Wednesday and requires BHP's board to give its final approval for the first phase within 12 months.

Asked by reporters if the 12-month deadline was negotiable, Rann said it wasn't, in order to ensure changing market conditions would not dampen BHP's interest.

Concerns are mounting that industrial growth in China, the world's biggest consumer of copper was slowing down, cutting demand for the metal at a time when the global supply pool is increasing.

Exchange-traded copper shed nearly 3 percent on Tuesday as worries about the sustainability of China's economy compounded the Western world's growth prospects.

"That's why we insisted on the 12-month sunset clause whether there is a global downturn or not," Rann said.

Most of the $1.2 billion is conditional on parliamentary approval of a binding agreement with the state government, with the state parliament expected to endorse it by December.

Geologists estimate BHP Billiton will take four or five years to access the additional ore required for the expansion, after which the life of mine would be extended to more than 100 years from its current 20 years.

BHP has agreed to set aside a chunk of land roughly the size of London as an environmental buffer zone and to monitor the mine's impact on birds and fish inhabiting hundreds of kilometres around the mine site.

It will also construct a desalination project and a 320 kilometre (200 miles) pipeline to bring saltwater to the site.

The mine already uses 35 million litres of water daily, making it the largest industrial user of underground water in the southern hemisphere.

The proposal is also subject to independent reviews by the Australian Radiation Protection and Nuclear Safety Agency, since an expansion would also lift annual uranium production to 19,000 tonnes from around 4,000 tonnes now.

[crawf]

I find it concerning that this was done in Melbourne and not in the home state of Olympic Dam, rushed much?... but that's just me.

[AG]

I find it concerning that this was done in Melbourne and not in the home state of Olympic Dam, rushed much?... but that's just me.

BHP's HQ are in Melbourne... (at least they are at the moment)

[Brando]

Anyone have any idea what sort of office space BHP will be taking up in the CBD????

[Waewick]

are they even moving offices?

I've heard they are in the look out for a small amount of office space - but I also heard they are keeping their headquarters in the same spot.

[rhino]

Where does it say Melbourne? The article says Sydney.

[UrbanSG]

Of course BHP will be keeping its headquarters in Melbourne. There was speculation they may move over to their huge new office in Perth but this is not likely. In any event they will not be moving their headquarters to Adelaide that's for sure!

However their Uranium division has its main office here on Grenfell Street. It is likely that BHP will require more office space in Adelaide thanks to Olympic Dam but how much is anyone's guess. A 40,000 sqm or so requirement would be perfect if it delivered a new tallest building. Maybe more likely to be between 10,000 and 20,000. I think they currently lease just over 10,000. The amount they require varies at different stages of the project too.

You'll find that it's actually the companies providing supporting services eg IT, engineers, accountants, lawyers etc that will end up leasing more office space in Adelaide.

This is where Kyren Group is smart with 70 Franklin Street because these supporting companies can't provide large 10,000sqm + pre commitments to get a new office building constructed. Instead they require a lot of 1,000 to 3,000sqm leases and will likely take out space in a building like 70 Franklin Street that doesn't require a substantial pre commitment due to developer funding.

[mattblack]

Answer on royalties once project is fully operational. Doesnt include the tax benefits of an additional 25,000 jobs.

ROYALTIES worth $350 million a year will flow into the state's coffers the agreement reached yesterday for the Olympic Dam mine expansion.

And the expansion of the world's largest mine will also create more than 25,000 jobs.

As a result of the deal signed in Melbourne by Premier Mike Rann and BHP Billiton chief executive Marius Kloppers, the mining giant has given a $1.2 billion pre-commitment to buy trucks and accommodation, and to provide early site works for the new mine site.

The majority of the pre-commitment capital is conditional on the successful passage of the indenture through the SA Parliament. Mr Rann will introduce the deal for parliamentary approval next week but Opposition Leader Isobel Redmond said she would not accelerate its passage to meet the Government and BHP timelines.

The $30 billion mine expansion will generate up to 6000 new jobs during construction, a further 4000 full-time positions at the open pit mine and an estimated 15,000 new indirect jobs.

This could include about 6500 jobs in Whyalla, Port Augusta, Port Pirie and Roxby Downs.

But under a sunset clause the State Government wanted written into the agreement, the company has one year from the time it is ratified by Parliament to formally begin the expansion.

After 12 months, the agreement lapses.

"Therefore we can expect project approval in 2012," Mr Rann said.

The Premier, clearly elated that agreement had been reached after 12 months of intense negotiations, said the new mine would eventually add about $8.6 billion a year to gross state product.

The current mine adds about $1.7 billion to GSP.

Business groups welcomed the announcement with Business SA chief executive Peter Vaughan saying it would provide a huge economic boost to the state for years to come.

Mr Kloppers said the company looked forward to having the indenture approved by Parliament and then his board could consider final approval for the project in the first half of next year.

Under the deal, BHP has committed to using South Australian suppliers, manufacturers and contractors for the expansion and will have to report annually on their use.

A key point of the agreement is that the company has also committed to double on-site processing of minerals at the site.

There had been fears in political circles that while the expansion would go ahead there was every chance the company would process much of the ore overseas which would have cost jobs.

"We are not cutting royalty rates to get this deal done," Mr Rann said.

"People were saying we would do a deal on royalties just to get the project to proceed.

"A higher royalty rate of 5 per cent was struck in the recent Budget and that will apply for uranium mined at Olympic Dam and 3.5 per cent for other metals such as copper, gold and silver."

Mr Rann said this would mean about $350 million a year in royalties from the expanded dam project.

He described the lengthy negotiations with BHP as "tough but dogged".

"This is going to be the world's biggest mine and naturally it's been tough," he said.

"I think it's a very good deal for the state. There have been a lot of tense moments along the way and I think ... all of us thought it was critically important that we get this sunset clause."

Mr Kloppers said he believed the agreement was a positive outcome for his company and SA.

"If approved, the project will generate significant new employment opportunities for SA in terms of direct employment, construction jobs and additional flow-on employment across the state for many years to come."

The first phase of the Olympic Dam Project to expand the mine is currently in feasibility and its progression into execution remains dependant on the completion of all required studies and board approval, likely next year.

"The pre-commitment funding is another important milestone in the development of this world class ore-body," Mr Kloppers said.

"Given the quality of this resource, the Olympic Dam Project team is completing studies to create one of the world's largest open-pit mines with the potential to increase copper production from around 180,000 tonnes per annum to 750,000 tonnes per annum - and beyond."

This week, BHP received environmental approvals for the project from the South Australian and federal governments, after assessment of its Environmental Impact Statements.

[[Shuz]]

$350m in royalties from ODX alone... now can we get a pre-commitment on keeping the Keith Hospital open, and repaying our state debt?