BHP Copper Needs Desal

$3.4 Billion Project to Open a Desalination Facility at the Site from 2017 Will Allow the Mine to Avoid Water Shortages Poised to Afflict Other Producers

BHP Billiton Ltd. (BHP), operator of the world's biggest copper mine, is studying options to raise output as it forecasts looming power and water shortages for some producers will spur a deficit from 2018.

"Industry production will be increasingly challenged by structural factors including grade decline and higher strip ratios," Melbourne-based BHP said today in a statement. Availability of power and water will also be "a significant constraint in several countries," it said.

About 4.5 million metric tons of new production capability will be needed to meet copper demand by 2022, according to Wood Mackenzie Ltd. The copper supply gap may reach 2 million tons in 2018, according to Goldman Sachs Group Inc.

Output will fall atChile's Escondida in the year to June 2016 before increasing on plans to extends the use of an aging concentrator, BHP said today in the statement. A $3.4 billion project to open a desalination facility at the site from 2017 will allow the mine to avoid water shortages poised to afflict other producers, BHP Chief Financial Officer Peter Beaven told investors today in Sydney.

Output at the Olympic Dam copper, gold and uranium mine inSouth Australiawill rise to about 235,000 tons a year in the 12 months from June 2017 through a $200 million program to allow full utilization of a smelter and refinery, according to Beaven.

Expanding an underground mine at the site would potentially raise production to 450,000 tons of copper and copper equivalent from around 2024, he said. BHP is studying options to carry out a slower and staged expansion, after it halted a planned Olympic Dam project estimated by Deutsche Bank AG to cost $33 billion.

Source: Bloomberg

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• Desalination
• Governance & Planning