BHP copper investment strengthens South Australian smelting hub

BHP

BHP copper investment at the Olympic Dam complex marks a decisive bet on South Australia as a long-term copper hub. The BHP copper investment totals $555mn and targets higher smelter performance and processing capability ahead of a larger expansion decision due in 2028. As a result, the BHP copper investment positions Olympic Dam to offset declining grades in South America and keep overall group copper output within its strategic range.

BHP copper investment prepares Olympic Dam for future expansion

BHP copper investment will fund several debottlenecking projects rather than one single mega-upgrade. The package includes a new oxygen plant that should raise copper concentrate smelting rates to 85 t/hour from 80 t/hour. It also funds an expansion of the underground electric rail network to 6km from 4.85km, supported by six new locomotives. These incremental changes increase throughput and logistics efficiency while keeping optionality ahead of a delayed multi-billion-dollar smelter and refinery expansion decision. Meanwhile, Olympic Dam acts as the processing backbone for Prominent Hill and Carrapateena, which both feed the centralised smelter and refinery. BHP expects combined South Australian copper production of 310,000-340,000t in the 2025-26 financial year, reinforcing the region’s growing share of group copper output.

Australian copper pivots as South American grades decline

BHP copper investment in South Australia comes as its South American assets face medium-term headwinds. The company has already signalled that copper output from Chile and Brazil will decline over time, with Escondida expected to fall to 900,000-1mn t/yr by 2030. Therefore, strengthening Olympic Dam, Prominent Hill and Carrapateena is essential to stabilise portfolio volume and preserve market share. However, BHP still faces structural challenges around high construction and energy costs for domestic smelting. To mitigate this, it has signed two renewable power purchase agreements with Neoen, which should cover around 70pc of its copper-related electricity needs in South Australia by 2030. These contracts help manage operating costs while supporting decarbonisation commitments. BHP produced a record 2mn t of copper in 2024-25, up 8.1pc year on year, and plans to maintain production within a 1.8mn-2mn t range in 2025-26.

The Metalnomist Commentary

BHP copper investment at Olympic Dam underlines how major miners now use incremental debottlenecking to bridge toward larger capex decisions. By lifting smelter performance and securing renewable power, BHP is quietly repositioning South Australia as a core copper processing hub as Escondida and other South American assets mature. For downstream users, this shift supports more diversified copper supply but will also tie long-term availability to Australia’s energy and project-cost trajectory.