Ministerial Statement

OLYMPIC DAM EXPANSION

The Hon. J.W. WEATHERILL (Cheltenham—Premier, Minister for State Development) (14:20): I seek leave to make a ministerial statement.

Leave granted.

The Hon. J.W. WEATHERILL: On 22 August, the government was advised by BHP Billiton of the decision of its board to defer the Olympic Dam expansion project to allow for the development of a new mine plan based on new technologies which involve capital efficiencies. I said at the time that this was a major disappointment for South Australia and the nation, especially for those workers and businesses who had set themselves to work on the expansion project.

In 2006, the state government established a dedicated Olympic Dam task force with a single-minded focus on doing whatever it took to achieve the necessary milestones. For the past six years, the state government, through the task force, worked collaboratively with BHP Billiton and the commonwealth government through the biggest environmental impact statement process in the nation's history.

Simultaneously, the state government negotiated an indenture with BHP Billiton, which locked in royalty rates and strong environmental standards. This indenture was ratified by parliament last November. This commitment was recognised by BHP Billiton on 22 August when it said these words:

The South Australian Government has been fully supportive of Olympic Dam and has created an environment that is highly conducive to business investment. We have been very much encouraged by their attitude to business development and the Olympic Dam expansion project.

Two conditions we did impose were prescient ones. First, we required that BHP Billiton proceed with the expansion within 12 months of the indenture being granted. This puts the onus on BHP Billiton to satisfy South Australians that it should be granted an extension of the indenture if, as has occurred, they would be unable to proceed within that time. Secondly, we secured a $1.2 billion precommitment of expenditure, whether or not the expansion proceeded, to ensure that after all of the work that had been put in to enabling the expansion to proceed there was a substantial amount of economic activity in South Australia.

When it made its announcement to defer the expansion, BHP Billiton requested that discussions with the state government occur concerning the implications of the decision. Those discussions have commenced. On Friday, members of the Olympic Dam task force, led by minister Koutsantonis, met with senior officers of BHP Billiton. Yesterday, I met with BHP Billiton chief executive officer, Marius Kloppers.

I anticipate that BHP Billiton will seek an extension of the indenture which this parliament granted last year. Obviously, in the event that it seeks an extension, BHP Billiton will need to satisfy the government that the circumstances in which it has found itself are sufficient to enable the government to lawfully consider an extension. It will also need to explain the way in which it intends to proceed on the expansion and how this differs from the original proposal so that we can properly consider the request.

I made clear to Mr Kloppers, given our experience and the uncertainty concerning the expansion, that for BHP to continue to receive the benefits of the indenture, it would need to reconfirm its commitment to the South Australian community. Mr Kloppers said that he understood the South Australian government's position. Our discussions will continue over the next few months but will be concluded by no later than early December.

Like the overwhelming majority of South Australians, I would like to see this project succeed, but it needs to succeed in the interests of South Australia. I note that there has been some commentary about the implications for the economy of BHP Billiton's decision. The budget has factored in a 0.49 per cent uplift in GSP and a 0.24 per cent uplift in employment in the next financial year, and a $44 million increase in revenue over the forward estimates for the expansion of Olympic Dam.

Clearly, our economy will grow at a lesser rate than it would have had the expansion proceeded. But we will continue to grow; we will continue to prosper. The resources of Olympic Dam, along with billions of resources elsewhere in South Australia, will be developed.

Honourable members: Hear, hear!

Mrs Redmond: Unbelievable!

The SPEAKER: Order!