‘Record copper royalties’ as Premier preps BHP ‘prenup’
The Premier wants a “prenup” with copper giant BHP before jointly funding a critical billion-dollar desalination plant saying a record monthly royalty check has landed from the mining giant.
SA Premier Peter Malinauskas will today announce that the government has received the “single biggest ever royalty check that has been given to the people of South Australia in the history of our state” from mining giant BHP.
He told ABC Radio Adelaide this morning that the check was worth “tens of millions of dollars”, saying he would provide further details about the royalty take at a press conference later this morning.
The Premier also talked about wanting a “prenup” with BHP before making a final investment decision about jointly funding the construction of a $5 billion 260 megalitre per day desalination plan and a 600km pipeline to transport water to the Far North to support the miner’s activity.
In December last year, the location of the mega project was selected by the state government south of Whyalla.
BHP has previously pulled out of promised expansions of its Olympic Dam mine, notably in 2020 when it dumped a $3.5 billion plan that might have increased copper production by 150,000 tonnes.
“I’m not going to allow for the state to be left at the altar,” the Premier said this morning.
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“We’re going to go through a process and we’re going to deal with the series of gateways between now and final investment decisions of BHP and South Australia on projects like Northern Water,” he said.
It follows booming copper mining activity at BHP’s Roxby Downs mines, with the company recently announcing a record was broken at Olympic Dam with the largest amount of material mined, ore milled and concentrate smelted in the third quarter of the financial year.
And it achieved record gold production at the far north site near Roxby Downs, the centrepiece of the company’s global copper business, which is the largest in the world.
The Premier also announced today that the government had signed a landmark agreement with BHP that was expected to modernise a 40-year-old bilateral framework guiding development at Olympic Dam.
This ‘Olympic Dam and Stuart Shelf Indenture’ will “enable better integration of the existing copper production… while establishing a clearer pathway for negotiations for further expansions”, the Premier said.
The legislative changes update the framework that underpins activities at BHP’s enormous copper precinct in the state’s Far North.
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Changes include commitments to transitioning to the current Aboriginal Heritage Act, water extraction, maximising local jobs and business opportunities, financial assurances and royalties.
“This is a massive opportunity for our state that we’ve talked about for decades and what we’ve been doing is methodically working through a whole series of gateways to unlock that investment,” Malinauskas said this morning on ABC Radio Adelaide.
“This is a big opportunity to generate new wealth for the people of South Australia into the long term, and this piece of legislation enables that, but at the same time it actually places upon BHP a higher degree of regulation than they’ve been legislatively required to be subject to in the past.”
BHP is the largest producer of copper globally and currently employs around 8,000 South Australians.
The Indenture will not dictate or guarantee BHP’s planned copper mine expansion plans – including developing a two-stage smelter and increasing copper production to 500 ktpa.
But “it does radically increase its likelihood”, Malinauskas said.
In October, BHP announced it would be spending $840 million to expand its Olympic Dam mine, which will include building a new access tunnel, a more extensive underground train network with six new trains and the installation of an oxygen plant.
While Olympic Dam already extends hundreds of metres underground, the company was yet to find the bottom of the deposit.
The company has already announced a smelter refinery project to expand refinery capacity and increase copper production to approximately 500 ktpa, and potentially up to 650 ktpa. This would involve the development of a two-stage smelting process, and expand refining facilities to produce cathode copper, gold and silver.
– more to come
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