A “challenging” resources sector will see BHP Billiton’s Olympic Dam mine expansion remain on hold, company chief executive Andrew Mackenzie says.
The miner said it will continue to secure productivity gains across the business to keep current mining operations running and will update the market on the shelved Olympic Dam extension in about a year.
The $US20 billion project is unlikely to go ahead unless a technological breakthrough at the Roxby Downs site in South Australia is made, The Australian reports.
"We continue to look at new ways technologically as to how we could further expand the existing operation of Olympic Dam," Mackenzie said.
"We see a lot of potential there, but we take a long-term view and we have to find something that is economically competitive, and that does require a technological breakthrough."
The expansion was canned in August last year with the then CEO Marius Kloppers blaming weak commodity prices and spiralling costs.
BHP said it will look at advancing heap-leaching technology rather than expanding capacity but according to The Australian the technology has not been proven on a large scale.
Mackenzie explained sluggish uranium prices have increased pressure across the sector.
"Right now, mining is quite challenging and we are facing particular challenges . . . in the uranium markets as a result of some of the concerns around the world about nuclear power," he said.
"These are all adding impetus to us having to make big gains in productivity -- not just within the new project but actually within the current operations to maintain competitiveness and viability."
In November the South Australian Government granted BHP Billiton a four year extension on its indenture agreement to give the company more time to plan its expansion.
Premier Jay Weatherill at the time said there is “no doubt that they want to develop this resource”.
The expansion would’ve elevated Olympic Dam to the status of the world’s biggest uranium mine, increasing copper output to 750,000 tonnes a year.
Mackenzie defended the decision yesterday saying the company still has a strong presence in the state employing 4000 people and contributing about $90 million to the South Australian economy in taxes and royalties.