Olympic Win For Australia After Mining Approval

Wednesday, 19 October 2011

Background

In mid-October 2011, the Federal and South Australian Governments gave approval for a massive expansion of BHP Billiton’s Olympic Dam mine. When operational, the proposed 4 km long, 3.5 km wide and 1 km deep copper, gold and uranium mine will create 13,000 jobs and contribute $45 billion to the economy.

Comment

BHP Billiton aims to transform current operations at Olympic Dam by converting the existing underground operations into the world’s largest open-cut mine. To achieve this, the company will assemble the world’s largest fleet of earth movers and excavate the area for more than five years, just to reach the copper and uranium reserves. The company has announced an additional $1.21 billion in complementary pre-commitment investments, including upgrades t o the Roxby Downs Airport, desalination and power plants, and development of the transport infrastructure.

More than 100 strict environmental conditions have been placed on the project, both while operational and in the years beyond. Due to the controversial nature of uranium mining, various government bodies and civil stakeholders have been consulted in the approvals process. According to Federal Environment Minister, Tony Burke, the various assessments of the mine “ensure that the proposal meets world-best practice environmental standards for uranium mining and ensure managements of native species and groundwater resources.” ^[1]

The extension of the ‘mining boom’ to South Australia will provide huge economic benefits to regional communities, the state and the national economy. Assessments suggest Olympic Dam has the capacity to produce copper and uranium ores for 40 years, although some analysts suggest operations could continue for over a century. Jason Kuchel from the South Australian Chamber of Mines and Energy said: “in addition to the huge economic income stream brought to our state and the nation through taxes and royalties once the expansion is operational, the indirect benefits created will be phenomenal”.  

According to economist Colin Lea, in a broader context BHP Billiton’s announcement “reflects a rare glimpse of long-term strategic planning, almost visionary given the current economic climate”.  Australia has seemingly broken the historic ‘boom and bust’ cycles of the resource sector. Governments can now be confident of a sustained stability in the industry and develop policy accordingly. The Olympic Dam Mine is yet another credential in Australia’s position as a global resource hub.

Typically, the announcement of the mine expansion was not without controversy. Environmental groups cited radon gas, radioactive tailings, acidic liquor and the mine’s massive water and energy requirements, as key areas of concern. Green’s spokesperson Scott Ludlam went so far as to contend the project was a “carcinogenic mountain range.” The Keep the Gulf Clean Group, formed by fishermen in Spencer Gulf, where the proposed desalination plant is to be built, are equally concerned over the effect of the discharge of extremely salty water into the delicate ecosystem and the resulting impact on prawn and cuttlefish numbers.

While the concerns of environmental groups are valid, Mr Ludlam’s comments are alarmist and ignore the opportunities the development presents. Greater global access to stable uranium supplies will encourage emerging nations to examine nuclear power for their energy mix, decreasing emissions created by fossil fuels. Capacity exists for Olympic Dam to support scientific research and education promoting nuclear safety, addressing environmental concerns and improving efficiency. International and domestic concerns over the industry have led to the creation of a highly regulated sector, with an existing government capacity to control the industry. The Australian Radiation Protection and Nuclear Safety Agency, the Supervising Scientist, Geoscience Australia and State mechanisms will together provide the requisite scrutiny and ensure that any harm to the environment is minimised. Where potential concerns arise, these organisations will drive the examination of the problems.

Uranium mining, particularly in a post-Fukishima world, remains an inherently controversial industry. If Australia is to be the Saudi Arabia of uranium, as the South Australian government has projected, key issues must be resolved, including future export markets and Australia’s enduring role and responsibility in the sector.

Liam McHugh

Manager

Northern Australia and Energy Security Research Programmes

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