BHP Spends $555 Million Upgrading Olympic Dam Mine to Prepare for Potential Doubling of Australian Copper Production
BHP Bets Big on Copper as Global Shortage Looms
Mining giant’s fresh push at Olympic Dam signals a shift toward future-facing metals, while keeping past mistakes firmly in mind
ADELAIDE, Australia — Deep beneath the South Australian desert, BHP is digging into one of the world’s trickiest ore bodies with renewed confidence. The mining giant has committed more than A$840 million (about US$555 million) to a series of projects at its Olympic Dam site—an investment that might look modest on paper but carries big strategic weight.
The cash will fund an underground access tunnel, an upgraded backfill system, extended ore passes with electric rail, and a new oxygen plant to boost smelter output. In simple terms, BHP is clearing bottlenecks and making sure this complex mine runs more smoothly. At the same time, the move keeps the door open for something much larger: a potential multi-billion-dollar expansion, without repeating the bruising missteps that forced it to abandon a mega-project here more than a decade ago.
Copper: The New Oil of the Energy Transition
This renewed push comes at a critical moment. Copper, once thought of as just another industrial metal, has become the backbone of electrification. You’ll find it everywhere—from the wiring in electric cars to the vast networks that feed renewable power into the grid, even inside the data centers driving artificial intelligence.
BHP expects copper demand to jump 70% by 2050. That’s an extra million tonnes needed every year by 2035. Yet global supply hasn’t kept up. Mines are aging, ore grades are falling, costs keep climbing, and political risks in top producers like Chile, Peru, and the Democratic Republic of Congo haven’t gone away. Disruptions at places like Indonesia’s Grasberg mine, combined with weak refining margins, show that the crunch has already started.
In this climate, Australia looks like a safe haven. It offers stable regulation, strong infrastructure, and fewer geopolitical headaches. For BHP, Olympic Dam is more than just a mine—it’s a cornerstone of its broader strategy to shed coal and oil and double down on what executives call “future-facing commodities.” With copper, uranium, and gold all in the same deposit, the site ticks that box perfectly.
Lessons From a $20 Billion Misstep
BHP’s caution today is shaped by a painful memory. Back in 2012, the company scrapped a US$20 billion plan to turn Olympic Dam into one of the world’s largest open-pit mines. Costs spiraled, prices swung wildly, and the geology proved more stubborn than expected. The project collapsed under its own weight.
This time, BHP isn’t rushing. Instead of dropping billions all at once, it’s taking small, calculated steps—fixing the mine’s choke points and getting current operations humming. If all goes to plan, the company could approve a bigger smelter and refinery upgrade by late 2028. Analysts estimate that expansion could cost between US$2 billion and US$3.5 billion, doubling South Australia’s copper production to around 650,000 tonnes a year by the mid-2030s.
The strategy also links Olympic Dam with BHP’s nearby Prominent Hill and Carrapateena mines. By blending ore from different sources, the company solves a long-standing technical problem and spreads infrastructure costs across a wider production base. In plain English: more flexibility, less risk.
Water, Power, and the Less Glamorous Challenges
Of course, mining isn’t just about blasting rock. Behind the bold plans lie practical hurdles that can make or break the project. The most important? Water. Olympic Dam’s expansion hinges on the Northern Water project—a massive desalination plant and a 600-kilometer pipeline to carry fresh water inland. Without it, there’s no expansion. Environmental approvals and procurement won’t be finished until at least 2026, so investors will be watching closely.
Power is another big one. Smelting gulps electricity, and lots of it. Luckily, South Australia’s grid is one of the most renewable-heavy in the world. BHP has already locked in several clean energy deals, including a 100-megawatt contract, putting it in a good spot to produce “green copper.” That could prove valuable as buyers increasingly demand low-carbon materials.
The current projects will also create about 200 construction jobs, a welcome boost for the local economy. But the bigger question lingers: can BHP tame Olympic Dam’s notoriously tricky geology and squeeze more productivity from it?
Crunching the Numbers
For analysts, the math is both promising and uncertain. With copper hovering near US$10,000 a tonne, an extra 150,000 to 250,000 tonnes a year from Olympic Dam could deliver returns between 9% and 20%. That’s not a game-changer for a giant like BHP, but it’s still attractive.
Depending on copper prices and execution, the first stage alone could generate US$4 billion to US$8 billion in value. After adjusting for risks, most expect about half that. In other words, it’s a solid bet, not a company-making gamble.
The integrated miner-smelter model also gives BHP an edge. While independent smelters struggle with weak margins, BHP controls the entire process—from digging the ore to refining the metal. That ensures it captures profits at multiple stages and can adjust production to market shifts. Uranium and gold by-products add a little extra cushion, though uranium recovery remains technically tricky.
What Investors Should Watch
So what’s next? A few key signals will tell the story. If the Northern Water project stalls, the whole expansion could slip into the next decade. Cost control across BHP’s South Australian copper assets will matter too. The company currently guides costs at US$1.30 to US$1.80 per pound, but if they drift to the higher end, returns could take a hit.
And then there’s copper itself. If prices stay above US$9,000 a tonne, expansion looks far more likely. If they sink below US$7,000, history suggests BHP may delay again. Even if Olympic Dam doubles production, it won’t solve the world’s looming copper shortage on its own, but it could help set a higher floor for global prices.
A Measured Bet on a Copper-Hungry Future
If approved, Olympic Dam’s expansion would give BHP a bigger slice of a market expected to remain tight for years. The step-by-step approach shows capital discipline and keeps options open, while still positioning the company for the upside of a copper-driven energy transition.
But don’t expect quick fixes. Even with a green light in 2028, new production wouldn’t flow until the early 2030s. The copper market is likely to stay under pressure long before then.
For now, BHP’s half-billion-dollar commitment isn’t a grand gamble. It’s more like a carefully hedged option: a way to prepare for a copper-hungry world without betting the farm. The real test will come when water, power, and market prices all line up—and only then will Olympic Dam’s full potential be unlocked.