Is BHP for real this time?

Look, I know we have been down this road before but is it possible that BHP actually means what it says this time and that it’s about to embark on a series of projects that will provide South Australia’s economic backbone for decades to come?

Yes, we have been here before. And it’s difficult not to be at least a little skeptical. There have been promises before, after all. It was all the way back in 2012 when then Treasurer Jack Snelling said in his budget speech that “South Australia will be a very different place in a few years’’ because of the expansion plans BHP had at the time for Olympic Dam. BHP had floated a $20 billion investment to build the world’s largest open cut mine. Never happened.

In 2020, it cancelled a $3.5 billion investment at Olympic Dam.

Yet, here we are again. All hyped up and ready to believe another BHP promise.

Yet, looking at the numbers that BHP released this week as part of its profit report and the temptation is, despite all that history, to believe that this time it will follow through.

BHP is predicting that by the mid-2030s it will be extracting more than 650,000 tonnes of copper a year in South Australia. That’s almost double what it’s mining at the moment.

No one was talking investment dollars but to get to those sort of numbers, it will have to spend billions and employ thousands.

It will need to expand its existing smelter at Olympic Dam. It will need to have its prospective new mine at Oak Dam, which contains about 8.8 million tonnes of copper, up and running. It will be expanding Olympic Dam by digging deeper into the mine than ever before. It will be contributing to the state government’s multi-billion dollar Northern Water Supply Project.

It has already spent $10 billion buying Oz Minerals for access to its mines at Carrapateena and Prominent Hill.

It all comes down to copper. BHP believes copper is going to be in high demand as the globe moves towards decarbonisation and electrification and South Australia has more of the red metal than just about anywhere else in the world.

Copper is an excellent conductor of electricity. Electric cars need between 60kg and 83kg of copper. That is around four times the amount required in a car powered by an internal combustion engine. The charging ports also need copper of between 1kg and 7kg. A fast DC charger can contain up to 25kg.

Solar panels and wind turbines also require a lot of copper. A 3MW wind turbine is powered by as much as 4.7 tonnes of copper.

And so it goes on. The demand for copper is expected to only grow, while the supply of copper is not expected to keep up. It was a long time ago but even my year 12 economics knowledge tells me this means prices will go up.

If all this comes off, it going to means a lot of jobs, a lot of royalties for South Australians for decades to come.

What BHP has planned for South Australia is a lot more real at this stage than some other projects that have been billed as recent economic boons. The state government’s $600 million hydrogen project at Whyalla feels more like wishful thinking than a reality. The idea of green steel coming out of the Whyalla steelworks is not even wishful thinking while Sanjeev Gupta is in charge. At the moment it doesn’t seem capable of making steel the old-fashioned way, so any thoughts of green steel are laughable.

A lot has been said about AUKUS and future submarines but there is a long way to go on that as well. It still feels as it sits in the possible rather than probable category.

The uni merger? Well, it will happen. Whether it will be a success is rather harder to read.

It’s hard not to be nervous about BHP as well, but this time it does feel different. This time it may well happen.

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On the reading front, I polished off Vince Rugari’s biography of Ange Postecoglou this week. I am reviewing it for The Advertiser so won’t say too much but it is certainly a cut above most sporting biographies I have read. Postecoglou is a fascinating character and Vince does him justice. Now on to The Great Gatsby. I don’t think there is a link. Saw it on the bookshelf and realised I hadn’t read it since school days so decided to give it another go.