SA hits paydirt as mine contracts signed
Simon Manser is SA manager of Ausco, prefabricators of accommodation huts for the Olympic Dam mining expansion. Picture: Dean Martin
THE dollars have begun to flow into South Australia for the massive expansion of the Olympic Dam mine.
In a pivotal move for the state's economy, BHP Billiton has engaged local suppliers for early works.
It is the start of $525 million to be signed off on in SA by July.
Elizabeth West company Ausco is among the first to win work, building transportable accommodation units which will house some of the first of 10,000 workers for the project.
"This is really important for manufacturing in SA," said Ausco's general manager for the southern region, Robert Wormald.
"We know that SA has the skills and expertise. This has given us the opportunity to grow in capability and scale. And it's given our suppliers surety."
Ausco will build units containing 1264 rooms for BHP, in an initial contract that will take about a year to fulfil.
In preparation, Ausco increased its shopfloor workforce by 50 per cent to 120 during 2011 and is busy recruiting the same number again - a doubling within 18 months. It also has about 40 office staff.
A similar story is unfolding with another of the early contract winners, Wayville-based civil engineering firm Exact Mining.
"We'll be ramping up quickly over the next four to six weeks to about 140 people at Olympic Dam," said Exact Mining business development manager Shaun Matschoss.
"That'll be 50 to 60 of our existing personnel and then we'll be recruiting 80 to 90 specifically for this project."
Exact has been hired to build haulage roads and level the site alongside the proposed open pit of the copper-gold-uranium mine, so heavy equipment can be brought to Olympic Dam in readiness for BHP's board decision to go ahead with Stage One of the expansion.
Exact will bring in its specialist crew, which has been working in WA's Kimberley, adding to staff at its Roxby Downs base.
It also intends to expand its indigenous workforce development venture based in Port Augusta.
"We've been able to put long-term unemployed indigenous people through training," Mr Matschoss said.
"We've had good success there and this project will dovetail into those programs."
The contracts flow from BHP's allocation of $US1.2 billion in so-called pre-commitment funding, ahead of the board's final decision which is expected by mid-year.
The allocation has enabled BHP to place firm orders for long lead-time equipment such as mining trucks as well as accommodation and site works.
BHP uranium president Dean Dalla Valle - who heads the Olympic Dam project - said he was very pleased some early work was being won locally in SA.
"We have already engaged with local contractors and suppliers to ensure they are aware of the opportunities that may lie ahead and we will continue to contract locally where appropriate," he said.
He cautioned that the project was still in the feasibility stage and that "its progression into execution remains dependant on the completion of all required studies and board approval".
Other companies to secure contracts include Roxby Downs-based earthmovers Heading Contractors and Kent Town engineering company Tonkin Consulting.
Ausco was founded in SA 50 years ago but is now owned by a UK private equity business following mergers and acquisitions.
Its Australian headquarters are in Brisbane but Mr Wormald said the SA branch acted fairly autonomously and served this state, NSW, Victoria and the Northern Territory.
It has built units for other SA mines including Iluka Resources' Jacinth-Ambrosia, OZ Minerals' Prominent Hill and IronClad's Wilcherry Hill on the Eyre Peninsula.
However, the Olympic Dam project had created the opportunity to step up a level.
THE STORY SO FAR
1975 - Olympic Dam mineral deposit discovered by WMC Resources.
1988 - Mine officially opened, production commences.
2005 - BHP Billiton acquires Olympic Dam.
2006 - Draft proposal for expansion.
2009 - Draft Environmental Impact Statement released.
May 2011 - Supplementary Environmental Impact Statement released November 2011 - The South Australian Parliament approves the Indenture Act allowing the proposed mine to go ahead
THE ROAD AHEAD
January 2011 - BHP starts spending $US1.2 billion in pre-commitment funding.
Mid-2012 - The BHP board is expected to meet and formally sign off on the development of the project
After that, it will take about five years of mining to remove the 350m thick layer of overburden and expose the ore body.
Construction will take 11 years in all, and will include a new accommodation site for up to 10,000 people.
The expansion is expected to create about 25,000 new jobs.
Over 40 years, the size of the pit will grow to be 4.1km long, 3.5km wide and 1km deep.
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