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BHP to cash in on record Olympic Dam production

Business

BHP has recorded its best year for gold and copper production at Olympic Dam since taking over the mine in South Australia’s Far North in 2005.

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The company also increased its iron ore production, chiefly out of Western Australia, as booming Chinese demand continued to drive record prices.

The publicly-listed company released its Quarterly Activities Report to the Australian Securities Exchange this morning, which is likely to point to a strong financial result for the year.

Olympic Dam copper production increased by 20 per cent to 205,000 tonnes for the year, reflecting improved smelter stability and strong underground mine performance, the company said.

This was up from 172 kilotons of copper in the 2020 financial year, which was 7 per cent up on 2019.

It also achieved record gold production of 146,000 ounces in FY21.

“This strong performance is a reflection of the capability and commitment of our employees and contractors, the strength of our systems and the support of our business partners,” BHP Chief Executive Officer Mike Henry said.

“Olympic Dam in South Australia had its highest annual copper production since BHP acquired the asset in 2005, and its best-ever gold production.

“BHP is in great shape. Our operations are performing well, we continue our track record of disciplined capital allocation, and our portfolio is positively leveraged to the megatrends of decarbonisation, electrification and population growth.”

However, Olympic Dam uranium production fell 11 per cent for the year to 3267 tonnes. This was mainly due to a 40 per cent production slump in the June quarter, when just 614 tonnes of uranium was produced.

Copper production at Olympic Dam for the 2022 financial year is expected to decrease to between 140 and 170 kt as a result of a planned major smelter maintenance campaign and subsequent ramp-up planned between August 2021 and February 2022.

Olympic Dam has commenced operation of its new electro-refinery crane in May.

The 95-tonne crane with 32-metre span is used to submerge 360-kilogram copper anodes into the refinery’s 768 individual electrolytic cells, which extract the purified final copper product that Olympic Dam exports to global customers.

BHP Olympic Dam Asset President Jennifer Purdie said the new refinery crane would improve operational stability and reliability and support increased production volumes over the long term.

“This project shows BHP’s commitment to our long-term future in South Australia by continuing to make significant investments, creating local jobs and opportunities for regional businesses,” she said

Overall, BHP’s global copper production was down 5 per cent for the year to June 30 to 1636kt.

This was mainly due to reduced operations as a result of the coronavirus pandemic at its Chilean mines, which include the world’s largest copper mine, Escondida.

But this drop in production looks to be more than offset by the increased average realised copper prices, which were up 52 per cent on the previous year to US$3.81per pound.

The company’s 2 per cent increase in iron ore production has also been boosted by a 69 per cent increase in average realised prices across the year.

Record iron ore production was achieved at Western Australia Iron Ore and Goonyella.

BHP’s minerals exploration program includes a major copper target at Oak Dam, about 65km south of Olympic Dam.

The next stage of resource definition drilling to inform future design commenced in May 2021.

Previous drilling at Oak Dam has confirmed high-grade mineralised intercepts of copper, with associated gold, uranium and silver.

BHP shares opened at $50.50 this morning, up from $38.80 a year ago.

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