The scale of the proposed expansion of mining operations at Olympic Dam detailed in the recently released draft Environmental Impact Statement (EIS) is astounding. Total production of copper, uranium, gold and silver is set to triple from about 235,000 tonnes per annum to 750,000 tonnes, adding about $56 billion to South Australian economic output over 30 years. Construction of the new operation will require more than 4000 workers on site over ten years. Around 8000 permanent employees will be required to run the facility, generating thousands of flow on jobs in other parts of the economy. The industries to gain most from the expansion include rail transport, electricity, water transport services, chemical production and road transport.
Governments dream about projects like this one. Tax revenue flowing to the State Government from the expansion is expected to be about $2.1 billion over 30 years. Mining royalties paid to the State Government are projected to increase by about $190m per annum when the new mine is operational. Because any substantial change in state revenue affects the formula for distribution of GST, this additional income will result in some decline in South Australia's share of the GST. Despite this, the net effect is that South Australia is projected to be about $4.7 billion better off over 30 years than it otherwise would have been. The Australian Government is expected to collect an extra $1.3 billion per annum in additional GST revenue. These are extraordinarily seductive prospects.
There are major policy challenges for the State Government flowing from the draft EIS. It wants to double the value adding opportunities flowing from Olympic Dam but the EIS reveals that over two-thirds of radioactive copper concentrate extracted from the new mine will be shipped to China for processing. Securing a better outcome on value adding would substantially boost jobs and exports. It is also appropriate that BHP Billiton begin to pay a higher mining royalty than they are currently paying in exchange for the enormous financial benefits they will reap from the development. A modest increase in the 3.5 percent mining royalty paid by BHP Billiton would provide a much-needed additional source of revenue for the State government.
The EIS revealed that the expansion of Olympic Dam will require the construction of a larger desalination plant at Point Lowly than was originally proposed. A 280 megalitre facility will produce a substantially larger outflow of waste brine from the plant into the surrounding marine environment, heightening concerns about impacts of the plant on the giant australian cuttlefish. The research undertaken in the EIS suggesting that there is no significant risk to the cuttlefish should be independently verified.
One of the biggest problems associated with the expansion is the impact it will have on greenhouse gas emissions. The EIS confirms that greenhouse gas emissions from the expansion of the Olympic Dam site will rise dramatically from 3.5 percent of the state's total emissions to about 10 percent, making the achievement of the State Government's greenhouse emissions target unattainable in the absence of a commitment to greater use of renewable energy sources. The Olympic Dam mine is already one of the state's largest electricity users, consuming about125 megawatts or 10 percent of South Australia's demand for baseload power. This is set to rise to 560 megawatts or nearly 50 percent of the state's energy demand. To help meet this demand, BHP Billiton is proposing the construction of a 270km powerline to Port Augusta or a new gas-fired generator, or a combination of both. While BHP Billiton has committed to purchasing `green power' from the grid to power the Point Lowly desalination plant the energy generation mix proposed in the EIS will see emissions rise not fall. Proven technologies such as solar thermal and geo-thermal were not given the attention they deserve in the EIS.
The social implications of the proposed expansion have largely been ignored in the public debate even though the EIS points to some substantial challenges ahead. Mining developments of the scale of Olympic Dam have profound social implications. Managing a large and rapid increase in the size of the resident and transient population of Roxby Downs is a major challenge. Nearly half of the existing workforce is made up of long distance commuters who often have tenuous links with the local community. Understanding their needs and the issues that arise from a fly-in fly-out workforce should be the focus of considerable attention.
The early years of the project will prove to be particularly challenging for the local community with the influx of a large, predominantly male construction workforce. Over the medium term upward pressure on already inflated land and housing prices will need to be addressed to ensure that decent housing isn't the preserve of high income earners only.
At about 1000 pages with 50 appendices the Olympic Dam Expansion Draft Environmental Impact Statement (EIS) main report is as overwhelming as the scale of the development it investigates. Not surprisingly the focus of most commentators on the EIS has been on the scale of the project and the economic and employment benefits that are expected to flow from it - an apparent antidote to the recession. It is now time to turn our attention to the wider social, cultural and environmental implications of the proposed development.
Don't be overwhelmed by the length of the EIS. Public comments on the draft EIS close on August 7.
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