October 7, 2009

Incident At BHP's Olympic Dam Could Impact Uranium Spot Prices

BHP Billiton's Olympic Dam malfunction

October 7, 2009 - 5:49PM

BHP Billiton Ltd and the South Australian government are investigating a major malfunction of the automatic ore haulage system at the mining giant's Olympic Dam operation.

BHP Billiton was unable to say whether the incident would harm production at Olympic Dam, which is a major producer of copper, uranium and other metals.

Nobody was injured when the automatic haulage system, which carries ore from underground to surface processing facilities, collapsed at (2300 AEDT) on Tuesday.

A secondary haulage system continues to operate at the mine.

"The safety of our workforce will take priority in determining any restart of haulage operations," BHP Billiton said on Wednesday.

In 2008/09 Olympic Dam produced about 194,000 tonnes of copper cathode, 4,000 tonnes of uranium oxide, 108,000 ounces of gold and 938,000 ounces of silver.

Commentators on Wednesday were cautious about whether the incident at the mine, which produces between eight and nine per cent of the mined uranium globally, could affect the commodity's price.

"It will have an impact on ore production, therefore copper and uranium production," RBS Morgans resources analyst Warren Edney said.

"It is possible it could affect uranium prices," Mr Edney said.

"It (Olympic Dam) represents about one per cent of global copper production on an annual basis, I don't think it will have an impact on the copper price," Mr Edney said.

A spokesman for SafeWork SA said the organisation was sending investigators to the site to examine the haulage failure.

"The haulage system of ore to the surface has had a major malfunction apparently and (caused) fairly substantial damage as it has collapsed," he said.

"Where serious damage has occurred it is notifiable, so the company contacted us as they should."

BHP Billiton said the company was making a full investigation into the incident to determine the cause of the failure and extent of the damage.


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