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BHP Billiton Ltd says it is going ahead with the multi-billion dollar expansion to turn its Olympic Dam mine in the South Australian outback into the largest open cut on earth, but the miner still needs approval from the federal and state governments.

The open cut at Olympic Dam would be biggest man-made hole in the world, lifting ore production at the site six-fold, which would require expanded minerals processing facilities.

Underpinning the proposed expansion is uranium exports to countries like China, BHP said.

BHP has laid out an ambitious timetable for redevelopment in its 4600-page environmental impact statement (EIS) today and estimates excavation work to begin in July 2010 at the earliest.

“The expansion described in this latest EIS would be a progressive development requiring construction activity over a period of 11 years,” the miner said in a statement.

BHP said the expansion could lift uranium oxide output to up to 19,000 tonnes a year from 4,500.

“Exporting uranium to new customers like China will be an integral part of creating value from the Olympic Dam ore body,” said Dean Dalla Valle, chief operating officer for the company’s Uranium Australia unit.

“We can do this with confidence because China is subject to the same strict safeguards arrangements as all of our other customers, he said.

Australia’s uranium industry has been hamstrung since the early 1980s by political hostility to the nuclear fuel, but long-standing bans on new mines by various state governments are gradually being lifted in the face of economic crisis.

The national government is also encouraging more uranium mining and courting new export business in China.

BHP, facing downturns in its major markets as the crisis bites, has cut 200 jobs at Olympic Dam as part of some 6,000 cuts worldwide as it battles falling commodities prices and demand.

The global miner said the additional support infrastructure would include a coastal desalination plant, a new power line and possibly a gas fired power station, a train line, an airport and additional housing for workers.

The environmental grounds of the expansion still need to be approved by the federal and state governments, and then by the BHP board. Only after board approval will the miner provide cost estimations.

The miner has set the timeframe of the project at 40 years, but has left the door open to a longer operation life, suggested by the size of the mineral resources.

A longer life for the mine will require more environmental approvals.

The draft EIS will be on public display for 14 weeks, when submissions can be made to government.

However, Dalla Valle said “we still have a lot of work to do before we can tell you when this project may start and how much it may cost”.

Some analysts have suggested the expansion could cost as much as $20 billion.

With no nuclear power industry of its own but sitting on the world’s single largest source, Australia sells all its uranium overseas, making Australia the world’s second-largest supplier behind Canada.

Russia and India have also expressed strong interest in buying Australian uranium to fuel nuclear power plants.

http://www.businessspectator.com.au/bs.nsf/Article/BHP-lays-out-plans-for-Olympic-Dam-expansion-still-pd20090501-RM8ZX?OpenDocument

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