Great Artesian Basin Protection Group

BHP has today revealed the environmental effects of its giant Olympic Dam project. Hendrik Gout wrote this article ahead of the media lock-up at which the 4000-page document was released.

Incomparable and unimaginable are not synonymous, but Olympic Dam is both. It will be the world’s biggest hole-in-the-ground, the largest copper and uranium quarry on the planet, the highest artificial mountain range on Earth and the richest mine since King Solomon.

All this just a few hours drive from Adelaide. South Australia is about to become the Colossus of Copper, the Midas of Gold. There’s just one niggling problem: the environment.

At three o’clock on Friday afternoon, BHP Billiton flicked a switch and the World Wide Web will instantly host the most massive environmental impact statement Australia has ever seen. Three-years in the making, more than 4000 pages long (110 pages to list just the guidelines), and according to Mines Minister Paul Holloway “the largest document ever prepared in this state”.

That EIS will lay out what BHP reckons are the environmental effects of expanding its Olympic Dam copper, uranium and gold mine near Roxby Downs, in the state’s far north.

By some estimates the resource is worth a trillion dollars and able to produce some 25,000 tonnes of uranium, half a million ounces of gold and one million tonnes of copper a year.

The company will ultimately dig a hole 7.5 kilometres long, five kilometres wide and more than a kilometre deep.

Stacked up, the 44 billion tonnes or so of overburden would effectively create a new mountain range. Depending on its shape, it might be 20 kilometres wide in each direction and almost as high as Mt Lofty’s 720 metres.

If so, the new artificial mountain might create its own micro-climate.

The EIS will have to address hundreds of other issues as well. Journalists will have little time to do more than scan the document when it becomes available at noon – they’ll have to read over 1000 pages an hour during the media lock-up – before their television deadlines tonight.

BHP has said it will not comment on the EIS after the weekend even though reporters can’t possibly read all the documents in the time available.

The report was initially going to be available for public comment for just 40 working days, which Mr Holloway said was more than enough time. Public pressure, led by Greens MP Mark Parnell and Liberal MLC Christine Schaefer, forced the Government to extend that to 14 weeks.

“Even with a 14 week public comment period, the community will still struggle to read and respond to the largest document ever printed in this state,” Mr Parnell said.

So what will the long-awaited report say? It looks at expanding the mine to 750,000 tonnes of copper product a year, three-quarters of its possible ultimate size.

WATER POLLUTION AND THE GULF

Firstly, the EIS will have to address the mine’s water requirements. The existing Olympic Dam mine, a comparatively tiny underground operation, already uses 35 million litres of water a day. It drags this from the Great Artesian Basin: prehistoric underground water which fell as rain on the western side of the Great Dividing Range up to a million years ago. It has since percolated underground, flowing a mere one to three metres a year.

The company pays the state nothing to access this public resource under a special 1982 Act of Parliament which over-rides every other piece of legislation (including safeguards in mining Acts, development Acts and environment protection Acts) passed by Parliament before or even since.

The company is actually licensed to take up to 42 million litres of water a day from the Great Artesian Basin, but even this will not be enough to quench the new mine’s thirst.

Today’s EIS will canvass building a giant desalination plant on the coast of the fragile Upper Spencer Gulf. That plant will produce about 200 million litres a day, 80 of which might be bought by the State Government to supply towns around the Eyre Peninsula. The State Government has committed $125 million and the Commonwealth $120.

This means nearly a quarter of a million dollars of state and federal funds are going into the desalination plant, so both governments have serious EIS issues and responsibilities to address. It means federal Environment Minister Peter Garrett may have the power of veto over the desal plant.

The Gulf fishing industry and environmentalists will closely examine the document to see what it makes of the tens of thousands of litres of super-saline water the plant will release.

“This is the worst possible place to build an internationally-sized desalination plant,” Australian Conservation Foundation campaigner David Noonan said this week. “The Gulf is shallow, low-flushing. It’s the breeding ground of the giant cuttlefish which is extremely sensitive to changes in salinity. The plant should be built on the ocean, not the gulf.”

Adelaide University marine biologist associate professor Bronwyn Gilanders says the sea around Whyalla is actually the world’s largest cuttlefish breeding zone, and that the plant could wipe them out.

“Squids and Cuttlefish are generally short-lived. So they live a year; they breed only once. So if you damage the eggs or affect their reproductive ability then potentially that will have devastating consequences on the population.”

The Independent Weekly has reason to believe that BHP’s EIS will dismiss the threat, and that its research will claim increased salt levels will not affect local sea life.

“Point Lowly is the last place on the SA coast you would put a desal plant,” says Mr Noonan, “and there are alternatives. We could build a reverse osmosis plant at Elliston on Eyre Peninsula’s west coast. Elliston has the ocean flushing that Pt Lowly lacks and enormous potential for year-round wind energy. Taxpayers are paying 20 per cent of the desalination plant’s capital cost and we should also have a big say on where it goes. It’s not good enough to leave it up to BHP.”

BHP wants to build at Port Bonython near Whyalla purely because it’s cheaper than on the ocean coast. The Independent Weekly expects the EIS to say that it will pipe desalinated water about 350 kilometres to the mine. At a cost of about $1.2 million per kilometre, such a pipeline will cost the company more than $400 million and it may want to take the shortest possible route irrespective of environmental concerns along the way. The EIS will talk about the pipeline as well as the plant, and conclude that environmental problems or risks are negligible or manageable.

POWER TO THE PEOPLE

Desalination plants require vast amounts of energy. The Independent Weekly expects the still-secret EIS to say it will need about 75 megawatts to run the plant, and a further 25 megawatts to pump the water from Port Bonython to Olympic Dam.

The EIS is likely to recommend a gas-fired generator to power the desal plant, but the actual mine’s energy requirements are far larger than that. At full production, the mine will use one-third of South Australia’s current electricity requirements. This will affect SA’s energy future for the mine’s 100-year life.

Where will it get the power? BHP is almost certain to say it wants a gas-fired power station at Olympic Dam and buy an increased load off the grid.

Government greenhouse targets set out in the State Strategic Plan want carbon dioxide emissions capped to 108 per cent of the 1990 levels by the year 2012. Premier Mike Rann has also given a commitment to limit CO2 emissions to 60 per cent of 1990 levels by 2050. But the mine’s expansion could increase SA’s total CO2 emissions by more than 10 per cent.

Prime Minister Kevin Rudd has now signed the Kyoto accord which sets similar goals, and that means Peter Garrett may have an influence on energy as well as water.

And then there’s the diesel. The expanded mine will a million litres of diesel a day, or two billion litres, just to reach the ore. The Federal Government is paying BHP a diesel fuel rebate of 18.5 cents a litre, a taxpayer subsidy to the world’s largest mining company.

CONCENTRATE ORE NOT

Open-cut mining is essentially a simple operation: dig it up and offer it for sale. But rather than ship raw earth around the world, mining companies generally process the rock to some degree by concentrating ore on site. Despite early promises, BHP will not go a step further and build a smelter here. Smelting produces mineral in its almost-pure form as well as thousands of direct and indirect jobs.

BHP initially indicated the concentrate would be smelted here and not in China. The Premier believed such assurances. “What we’re negotiating with BHP Billiton for is to make sure that as many jobs are done here in SA, that the work is done here rather than processed offshore,” he said in 2007.

“We’ve been negotiating with BHP Billiton and, despite what I read in one newspaper recently, the negotiations have been proceeding amicably.”

But the newspaper was right. In October 2008 the company finally announced that it had abandoned smelter plans. BHP uranium and Olympic Dam development boss Graeme Hunt said the company had given “very careful consideration” to processing options, and had decided to sell its product as concentrate rather than as refined metal.

“On-site smelting has a high capital cost and increases project execution risk, particularly in the isolated area in which Olympic Dam is established,” he said despite the Premier’s fury over the job losses.

But while the Premier said the Government would strongly oppose the company doing most of the processing overseas in 2007, by 2008 Treasurer Kevin Foley knew he was licked. “We want as much value added as possible to take place at the mine site but that is to be negotiated. One has to be realistic and constructive in negotiations,” Mr Foley acknowledged.

That decision has enormous repercussions. The EIS might say that if it exports 1.6 million tonnes of copper concentrate, that will make 400,000 tonnes of pure copper in China – and a few thousand tonnes of recoverable uranium. A country like China can extract that uranium and use it for nuclear power, and while Mr Rann opposes such a power station here he’s a strong advocate for it elsewhere.

On a visit to China in 2008, the Premier said his confidence had been buoyed by its potential as a uranium market. “Every single meeting I went to was about uranium,” he said. “We have got 50 per cent of the world’s uranium in SA. We are in pole position.”

He may have suddenly been bumped to the back of the grid. The Independent Weekly understands that the Federal Government is planning much tougher safeguards relating to uranium sales to China, even if it’s gift-wrapped in copper concentrate. BHP does not yet have export permits for that uranium. In May next year nuclear non-proliferation nations, Australia included, will meet in New York. Australia may want a new international treaty to make sure Olympic Dam uranium does not end up in Chinese bombs.

THE STING IS IN THE TAILINGS

Concentrated ore contains much higher percentages of gold, uranium and copper than what’s dug out of the ground. The stuff left behind after this process, called tailings, still contains vast quantities of radio-active material. The EIS will go to great length to say this isn’t a problem.

But problem it may be. Tailings have about 80 per cent of the radio-activity of the original ore. They contain radium and other decay products. Tailings are dust. They blow in the wind. There is wind in central Australia. An honest EIS might suggest that tailings have the potential, not to put to fine a point on it, to pollute.

A long way north of Olympic Dam is the Ranger uranium mine in NT’s Kakadu National Park. That mine will close in 2021. Federal Government environmental guidelines specify that the Ranger tailings be re-buried and rendered inactive for 10,000 years.

Peter Garret’s office, which will take longer than 14 weeks to assess this EIS, may demand the same level of safety at Olympic Dam.

If you walk around Olympic Dam now, you’ll see a mountain of tailings from the existing mine. It’s piled 30 metres high – the same height as a six-storey building – over four square kilometres. The new expanded mine could produce more dust than the average home vacuum cleaner has to handle – 70 million tonnes of tailings every year.

A RIGHT ROYAL FUTURE

The EIS is a statement of environmental impact, but it will also address royalties – the money the company pays the state to mine the ore. According to calculations done by SA Unions, mining royalties in this state are less than half those in other mining states, with only 3.5 per cent here compared with 7.5 per cent in WA for bauxite and iron ore, and seven to 10 per cent in Queensland.

So what’s the next step? BHP will hold a series of Eyre Peninsula and local town meetings from late this month, explaining its proposal and why it says the environmental risks are miniscule. Meanwhile scientists, economists, environmentalists, fishing groups and pastoralists will speed-read the document and make a response. BHP is then obliged to consider those responses and deliver its own verdict on the submissions. That’s when the fun starts.

When the final EIS, the supplement, is complete and released it will be assessed by state and federal governments. The Independent Weekly believes that this process will not be complete before the next state election due in March 2010. That means SA will go to the polls not knowing the government’s response to “the biggest document ever produced in this state” or the biggest mining project this country has ever seen.

Nor will we know how governments are going to deal with environmental issues which touch on global questions such as Australia’s part in the nuclear cycle, national demands such as energy requirements, and local threats such as a briny Spencer Gulf.

So here’s a prediction. Tomorrow’s EIS will say the project can go ahead on environmental grounds. The company will start moving to begin expansion and hope for a global economic recovery to coincide with increased production. BHP will pass the break-even point on its multi-billion investment within the first two decades, and after that it’s money in the bank all the way down to the year 2100.

But first, there’ll be new legislation presented in State Parliament to legalise the process. It will be a new form of the 1982 Roxby Downs Indenture Ratification Act. It will, once again, over-ride every other Act of Parliament passed up to now and into the future. The first that South Australians see of that legislation will be after the state election.

And BHP Billiton’s Olympic Dam will have an economic and environmental impact that is synonymous with mining on this scale: incomparable and unimaginable.

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