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Building a foundation for long-term, safe, sustainable growth at Olympic Dam

Jacqui McGill, Asset President, Olympic Dam
AMCHAM Business Luncheon, Adelaide, Australia, 4 August 2017

Good afternoon and thank you to the American Chamber of Commerce for the opportunity to speak today.  

I would like to acknowledge that the land we meet on today is the traditional lands for the Kaurna people and that we respect their spiritual relationship with their Country. I would also like to acknowledge the Kaurna people as the traditional custodians of the Adelaide region and that their cultural and heritage beliefs are still as important to the living Kaurna people today.

So I have just celebrated my 2nd anniversary at Olympic Dam, time flies!  The past two years have seen a range of highlights and some challenges but I can safely say there’s nowhere else in BHP I’d rather be right now. I’m also incredibly proud – and I’ll admit, a little bit relieved – that my team’s hard work means that OD is a very different operation today compared to the one I returned to in 2015. 

At that time, the OD team, and in fact the State, had been through a lot – BHP had deferred the open pit expansion and our journey to improve our safety, cost and productivity was underway. OD had also lost a lot of confidence and trust, both internally as well as across our community, industry and government stakeholders. But most importantly, I believe we weren’t doing a good job at clearly articulating what was next for the Olympic Dam operation in the absence of the deferred expansion plans.

After two years and a lot of hard work, the team is proud to play a part in BHP’s long-term strategy to improve returns and grow the value of the Company. So I’m pleased to be here today and have the opportunity share a little of the amazing work we have done and plan to do, to ensure Olympic Dam has a long and bright future in South Australia’s important resource industry.

Many of you may have seen BHP recently released our Operational Review for FY17. Copper production across BHP was down 16 per cent to 1.3 million tonnes, and at OD we were of course also 18 per cent lower than in FY16, at 166 kilo tonnes. There’s no doubt that compared to our 203kt production in FY16 – a record under BHP ownership – that this came as a bit of a disappointment to the team.

And while much has been said about the impacts to OD that were outside our control such as electricity issues, we should highlight that in FY17 we also began a program of work to invest in our infrastructure and to lay the foundations needed to support our long-term growth objectives.

A picture paints 1000 words – and I think this certainly helps illustrate just how much work is underway at Olympic Dam, and indeed is still to come. This financial year we have 49 major programs of work in execution. Forty of these are being supported by the new functional-regional model, which means we can draw on the incredible expertise within BHP’s Minerals Australia Projects team.

What you will also notice is that OD is currently delivering more major work programs than any other BHP operation in Australia. These projects represent the most significant investment we’ve ever made in our South Australian operations. These investments – in our underground infrastructure and above ground processing operations - help us build the foundation for long-term, safe, stable and sustainable growth at Olympic Dam.

Far be it from me to stir up interstate rivalries, but the #OlympicDamSquad definitely feel a sense of pride in the work we’re doing. It’s fair to say Olympic Dam has felt like a bit of an underdog compared to our larger iron ore and coal colleagues in the past, so it does gives me some satisfaction to be able to now, on occasion, remind my counterparts on the east and west coasts that South Australia is where it’s all happening right now.

Olympic Dam is set to benefit from BHP’s investment of more than AU$600 million in financial year 2018.

This figure is included in the Company’s Group capital guidance and prioritisation and covers a range of important programs of work underway in South Australia.

The investment is spread right across our operation – both in development of our underground mine but also in our surface infrastructure - to ensure our operations are more modern, reliable and able to support the processing of the additional tonnes in the coming financial years.

You can see in the graphic the three key areas for investment:

  • Around 20 per cent of our capital expenditure supports the Opening of the Southern Mine Area. This investment represents the underground expansion at Olympic Dam into the high-grade and previously untouched part of the ore body and is the cornerstone of our growth strategy. The SMA investment involves additional fleet, telecommunications, raise bores, power and other services.
  • The next largest proportion of investment is focused on Enabling Underground Development in the existing Northern Mine Area footprint.
  • And, most significantly, around 40 per cent of Olympic Dam’s capex program this financial year is directed towards Asset Investment. This includes investments in a wide range of infrastructure and programs onsite, including, most importantly – the major smelter campaign we call SCM. Without doubt, this is the single most important part of our investment story this year and is an A$350 million program of works spread across financial years 17 and 18.

CM officially kicks off in a fortnight, and is the most significant and longest maintenance campaign ever undertaken at Olympic Dam – and the largest ever planned shutdown by BHP in South Australia.

As you can imagine, it is also an extremely complex project so the team have been working hard to sequence work as efficiently as possible, with the first priority always being safety.

Extensive preparation work for the shut has been underway for a number of months and at the peak of construction, we’ll have 1,300 contractors on site working around the clock to help us dismantle, rebuild and upgrade all major components of the smelter.

While the rolling shutdown across surface operations starts in late August, all up the maintenance campaign will run for more than 100 days, and we’ll be maximising this planned downtime by also undertaking important maintenance and upgrade work on our refinery.

The smelter maintenance campaign is also a wonderful example of BHP’s new Operating Model in action. As I highlighted in relation to projects, the regional operating model has enabled us to take advantage of the best talent in BHP like never before. Where previous shutdowns would have been solely run by the Asset, we are now fully leveraging the new model to bring the maximum capability of both the regional and functional Projects team to this work. Due to the sheer scale and scope of the project, this is the first maintenance campaign to be undertaken this way and ensures we have great depth in support and management to execute safely and successfully.

We are taking the time to get this right, to give Olympic Dam greater stability and capacity and reduce the frequency of future smelter maintenance shutdowns.

But it’s not only our surface teams who are busy – there’s a lot happening underground in our mine as well.

As I mentioned in relation to capital investment, by the end of last financial year we had spent in the order of AU$250m developing the SMA.

While this work is taking place in the same location as what would have been the open pit, the focus has been vastly differently to earlier proposals. We’re being very selective in how we mine, which allows us to better target higher copper grade areas. All of this means that while we will increase the tonnes we mine over the coming years, importantly, we’ll also be increasing the percentage copper in every tonne of dirt we move.

Key to this work has been the efforts of what we refer to as our rapid advance development crew. Through the work of a dedicated crew focusing on a small number of headings in controlled and defined locations, they are allowing us to more quickly develop high value ore areas in our mine. This provides greater confidence in our growth path and is more cost effective. In adopting this approach, I’m incredibly proud that the team has already achieved some great results – including a 48 per cent increase in our jumbo productivity, from 6.5 to 9.6m per jumbo a day, and with up to 10 cuts in a single heading in a week, which is double the conventional rates.

Only recently in June, we added a second SMA rapid advance crew to our operation. This means we are now able to target two geographically separate areas within the mine at the same time, and we are already seeing terrific results.

Pleasingly, this work has also been well supported by our teams driving trucks underground. Since 2015, the team has worked really hard to improve safe productivity by over 50 per cent, which in a confined space such as an underground mine, is not only a great result for safety – but also more good news for OD’s overall productivity and costs.

But beyond Roxby Downs, there’s also a lot of great work taking place in Adelaide – particularly in research, development and technology.

You may have heard us talk about the trial of heap leach technology at Olympic Dam, as a potential low-cost processing option to support our future growth plans. But what you might not know is that this important and exciting R&D is taking place right here in Adelaide.

In the past 12 months, we’ve continued testing different process conditions and now have an increased level of confidence in operating the heap leach and solvent extraction process on Olympic Dam ores at variable saline qualities, from low salt to high salt content. This enables us to study a range of future water sources as part of our long-term future growth planning process.

We also successfully completed test work in Finland last year of smelting ripios concentrate from the heap leach process and existing OD concentrate in a pilot flash matte smelter. And I’m pleased to be able to share with you today that these tests were successful – the ripios concentrate performed well, and so now the team is looking at the different types of smelter technology, and conducting further test work and development.

Last month the project also moved into the full demonstration phase in Adelaide. We now have the heap leach and solvent extraction pilot plants all constructed, commissioned and operating to test and demonstrate the integrated heap leach process flow sheet. The team are receiving ore from site and we’ll soon be able to share their significant progress towards producing final products of uranium and copper cathode. And they remain on-track to complete the heap leach trials in FY19. So stay tuned!

Ultimately, this is a really important next step in considering the application of heap leach technology at Olympic Dam, which may enable us to expand production at OD to over 450,000 tonnes a year.

Of course it simply wouldn’t be possible for Olympic Dam to successfully execute all of this work without additional support. So we’ve been reaching out, far and wide, to ensure we have the best possible people working with us.

Olympic Dam was previously aligned with the BHP Copper business, with our colleagues located across the globe in Chile. And while we are still very connected to our South American Copper cousins, we are also reaping the rewards of the regional model and frequently calling on our team members from Coal in Queensland and New South Wales as well as Iron Ore and Nickel in WA.

Both Coal and Iron Ore have already gone through a number of their own major growth projects and Nickel West has quickly become the leader in productivity. So by working within this broader Minerals Australia team, it is really allowing OD to leverage the expertise, best practice and experience across a range of areas. And it’s wonderful to have some of my Minerals Australia leadership team members here today, to hear us share some of their great work, and I’d like to take this opportunity to say thanks to them for their continued hard work and support of Olympic Dam.

We’re also boosting the numbers in our own Olympic Dam Squad. And we’re particularly keen for team members who have different backgrounds, ideas and approaches to join us. Teams that are inclusive and diverse are good for business – the case is pretty clear.  However, it’s also a fact that at BHP we want a workforce that represents the communities we operate in – a workforce that appreciates all of the different aspects of individual uniqueness including thought and perspective. We’re also looking at our processes, systems and procedures and taking steps to mitigate bias. It’s a journey that’s well underway.

You might have seen that earlier this year we advertised for Expressions of Interest to fill 350 roles – and we used non-traditional means to reach and attract new audiences, so we didn’t simply receive applications from the same group of people.

Instead, we used our own Facebook page to share videos of some of our great team members talking about their own experiences, so people could see for themselves what it was like and decide whether they’d like to give it a go. We also profiled these opportunities through the media – with stories both in the Adelaide Advertiser and on the evening news so again, we could reach people who might not typically look for roles through regular channels such as Seek.

We had a huge response to our campaign in May and so far, 200 of the 350 roles announced have been filled. We also identified a further 1,880 candidates who have been moved into various talent pools for current and future vacancies across the operation. Through this process we also identified a significant number of female candidates in areas like truck driving, fitters and trade qualified, technicians, master data specialists, engineering, scheduling and planning – which is great news as we aim to build a more diverse and inclusive workforce that is reflective of the communities we operate in.

Through natural attrition, and to support current and future growth projects, we expect to continue to have a rolling requirement for around 250 roles at any one time. Anyone interested in hearing about future opportunities at Olympic Dam can follow our Facebook page (BHP Olympic Dam Community) for updates and also register for job alerts on the BHP careers page.

In addition to building capability within our workforce to prepare for growth, we’re also looking to renew our focus on effective contractor relationships. In July, we ‘opened the market’ so to speak, to find out what’s happening in construction services, and that’s why we launched the Industry Capability Network (ICN) Gateway online. This was a real opportunity to be transparent so more people, particularly South Australians, can participate in the long term growth of Olympic Dam.

To register, all that was required was an ABN and web access. We had a total of 226 submissions. Seventy per cent of registrations were new to OD and more than 31 per cent were South Australian. Safe to say reaching out more broadly was a success.

The programs I’ve talked about today are obviously well underway. Of course in the background, work continues on Olympic Dam’s future growth opportunities – including the Brownfields Expansion Project, ‘BFX’ for short, which could increase output to between 280,000 and 330,000 tonnes a year in the medium-term, as well as ODEP which has the potential to more than double our production to over 450,000 tonnes a year in the longer term. Both are subject to BHP’s rigorous internal approvals processes for major projects.

While these might be the ultimate prize for Olympic Dam and for South Australia, to get there my team and I remain focussed on continuing to ensure OD is a safe, stable and reliable operation each and every day, and that we retain the confidence of the broader BHP business that we have the capability to pursue growth and remain firmly focussed on safety and productivity.

I invite you to share in my vision for what Olympic Dam is, and can be, for South Australia. I’m proud to be investing in an operation that will grow sustainably for future generations. What the team at OD has achieved over the time I’ve been involved is nothing short of remarkable, but the story doesn’t stop here. Come with us on the journey.

For more information, please see our News Release.