PROMINENT HILL

The Hon. CARMEL ZOLLO (14:59): I seek leave to make a brief explanation before asking the–

Members interjecting:

The PRESIDENT: Order!

The Hon. CARMEL ZOLLO: —Minister for Mineral Resources Development a question regarding Prominent Hill.

Leave granted.

The Hon. CARMEL ZOLLO: I understand that premier Mike Rann officially opened the $1.15 billion copper and gold mine at Prominent Hill in May 2009, more than a year ago. This major new mine created 1,200 jobs during the construction and mining phases and is now providing economic benefits extending beyond the north of our state to jobs in the many industries in South Australia that support and rely on the resources sector.

With an open pit nearly half a kilometre deep, the copper and gold mine is expected to produce eight million tonnes of ore a year for the first decade of its operation. Will the minister provide any updates on the progress of mining at Prominent Hill and state whether there have been any significant developments that could extend the life of that mine and perhaps even open up opportunities for further exploration?

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Industrial Relations, Minister Assisting the Premier in Public Sector Management) (15:01): I thank the honourable member for her timely question. In fact, only just last week there has been a truly significant development announced by the board of OZ Minerals that will have a major impact on the continued future of mining in this state.

Last week, OZ Minerals' board of directors approved a $135 million underground mine at its Prominent Hill copper and gold project near Coober Pedy. Prominent Hill is already one of the most significant examples of a new generation of commercial mining operations that are coming on line in this state. Prominent Hill is one of the new operating mines, and we have seen a trebling in the number of operating mines in this state since this government came to office in 2002, and we look on track to grow that fourfold to 16 by the end of 2010.

The immediate go-ahead for an underground mine will complement the existing open pit operations and take this already major mining operation to a completely new level. Going underground will not only allow OZ Minerals to increase annual copper and gold production but opens the way for further exploratory drilling deep under the surface of the mine. Further underground exploration could possibly lead to even more potential discoveries at Prominent Hill, which would extend the mine's life.

The South Australian government, through PIRSA, approved the revised mining and rehabilitation plan (MARP) for the construction and operation of the underground operations in December 2009, clearing the way for last week's board decision. That approval had been delayed due to the uncertainty created by the national debate on a proposed resources super profits tax.

While this government accepted the need for a tax regime that ensures Australians receive a fair return on our country's resources, we argued forcefully that refinements were necessary to protect the interests of this state, in particular, our copper and gold projects, such as Olympic Dam and Prominent Hill. We know that those concerns were heeded and taken into account in the revised mineral resources rent tax. These changes, advocated by this government, ensured that copper, gold and uranium were exempt from the new resources rent tax. Now that the commonwealth has ended the uncertainty, we are quickly seeing evidence of renewed interest in long-term investment in our state's mining sector.

OZ Minerals' decision to proceed with an underground mining operation at Prominent Hill vindicates this government's stance on demanding revisions to the original resources profits tax. Major announcements such as the OZ Minerals' expansion at Prominent Hill ensure that South Australia continues to drive up mineral production beyond the goals we set ourselves in the South Australian State Strategic Plan. About 250 jobs are expected to be created at Prominent Hill from the underground operations, and about 25,000 tonnes of copper and 12,000 ounces of gold are expected to be mined underground annually.

OZ Minerals is in the process of hiring contractors to begin this project, which should take about two years to complete construction. This means that the new mine will be open and in production by the second half of 2012.

I would also like to take this opportunity to acknowledge the efforts made by OZ Minerals to work closely with the local and regional community in the development of its operations at Prominent Hill. OZ Minerals deserves special mention for the success it is having in attracting and retaining Aboriginal workers. A vibrant mining industry in South Australia offers the best opportunity for jobs in the outback and particularly so for Aboriginal people.

This government supports regional South Australia and the best way to show that support is by encouraging mining and the service industry that it requires to support its operations. This means more jobs closer to existing regional communities and the new and improved infrastructure that follows the mining sector.

The expansion of the Prominent Hill mine is great news for OZ Minerals, great news for the economy of South Australia and great news for South Australians. Again, it demonstrates that our critics, who want to dismiss the hundreds of millions of dollars invested into the mineral resources sector as just an exploration boom, are plainly wrong. The upsurge in exploration encouraged by this government's pro-mining policies is leading to the discovery of world-class ore bodies, generating keen interest from local and overseas investors. This, in turn, has created a pipeline of new projects and the potential to expand existing operations.

I personally witnessed the latest advance of this potential for new projects with the signing in Adelaide of the deeds of assignment of iron ore rights between Centrex Metals and Wugang Australian Resources Investment Pty Ltd. Wugang Australian Resources is the local arm of the Wuhan Iron and Steel Company, China's third-largest steel producer. The signing of this agreement allows the $261 million joint venture immediately to begin exploration and development studies on two new magnetite projects on southern Eyre Peninsula. Their aim is to establish two five-million tonnes a year iron ore projects within the next four to five years to build on the success of Centrex Metals' existing Wilgerup haematite iron ore development near Lock on Eyre Peninsula.

The investment commitment announced this month is one of the largest by a Chinese-backed steel entity in the recent history of the state's resources sector. OZ Minerals' decision to expand Prominent Hill and the signing of the joint venture agreement between Centrex and WISCO again highlight the continued investor confidence in South Australia's mining and energy sectors. The key reason for that confidence and the economic growth and prosperity that it is delivering to our state is the climate of investment certainty created here since the Rann government came to office.