BHP’s OZ Minerals bid is really about Olympic Dam

There was an uncomfortable moment at BHP’s 2018 annual meeting of shareholders in Adelaide when BHP chairman Ken MacKenzie appeared to chide his then Minerals Australia president Mike Henry over his public commentary on Olympic Dam.which questioned why BHP had been so patient with the under-performing Olympic Dam through an era in which lots of other better performing assets were sold or demerged to South32.

Four years on, MacKenzie has seemingly given Henry the nod to spend more than $8 billion turning the Olympic Dam of today into something different by acquiring the mine’s neighbour, OZ Minerals. OZ’s lower uranium levels allow it to run a much easier system; it exports an intermediate concentrate that others turn into metal interstate or overseas.Plans to build a giant open pit, a big heap leach processing operation, then a brownfield expansion came and went over the past 12 years, although the notion of building a giant heap leach operation hasn’t been dismissed permanently.

The fact BHP has this week gone looking for external copper resources to add to Olympic Dam’s enormous mineral endowment raises the question as to whether it now expects Oak Dam to be a modest contributor at the margins, rather than a revolutionary force at Olympic Dam. The two companies have previously shared infrastructure like power and roads too, and while some of those relationships have been abandoned as OZ matured, there could be efficiencies created by combining them.

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