BHP is preparing a major underground expansion of its Olympic Dam operation in South Australia as the mining giant seeks to dramatically increase copper production over the next decade.
The company has identified a substantial new block-cave resource beneath Olympic Dam, potentially allowing large volumes of lower-grade ore to be mined more efficiently.
Block caving involves allowing ore to collapse under its own weight before extracting it from beneath the deposit and is commonly used to develop extremely large underground resources.
The proposal forms part of BHP’s ambition to lift South Australian copper production to around 500,000 tonnes annually by 2035 and potentially 650,000 tonnes by 2040.
Copper demand accelerates
Copper has become one of BHP’s most important growth commodities as global investment in electricity grids, renewable energy, electric vehicles and artificial intelligence infrastructure accelerates.
BHP produced 401,000 tonnes of copper during the September quarter, although output was affected by scheduled maintenance, lower grades and operational disruptions.
Full-year copper guidance remains unchanged at between 1.65 million and 1.8 million tonnes.
The company is expected to provide more detail on its South Australian expansion strategy in November.
Meanwhile, Western Australian iron ore production remained resilient despite a maintenance-heavy quarter, although realised iron ore prices weakened.
BHP received an average US$76.27 per tonne for iron ore during the period, down around 9% from the previous quarter.
The changing commodity mix helps explain BHP’s growing focus on copper.
Iron ore remains enormously important to earnings, but long-term demand growth is increasingly concentrated in metals required to electrify the global economy.
Olympic Dam therefore sits at the centre of BHP’s attempt to reposition its Australian portfolio towards that next demand cycle.
