OLYMPIC DAM EXPANSION

Adjourned debate on motion of Hon. M. Parnell:

1. That this council notes—

(a) that the environmental impact statement and supplementary environmental impact statement for the proposed Olympic Dam expansion comparing the proponent's preferred option of exporting the uranium-infused copper concentrate to China for processing with the option for domestic processing is 'not discussed in sufficient detail to enable an understanding of the reasons for preferring certain options and rejecting others', as required in the guidelines for the preparation of the environmental impact statement;

(b) that this absence of detail does not 'provide an adequate framework in which decision-makers may consider the environmental, economic and social aspects of the proposal'; and

(c) that the state government has publicly expressed that it will 'strongly oppose any moves by the company to do most of the processing of minerals from the expanded Olympic Dam mine overseas'.

2. That this council calls on the state government to urgently require BHP Billiton to publicly release further detail, including economic modelling, justifying the export of South Australia's mineral wealth to China for processing over the option of processing here in South Australia.

(Continued from 27 July 2011).

The Hon. I.K. HUNTER (19:48): I rise this evening to give the government's response on this motion of the Hon. Mr Parnell's. As I understand it, the Hon. Mr Parnell is seeking support for a motion that is put forward for the state government to urgently require BHP Billiton to publicly release further detail, including economic modelling, justifying the export of South Australia's mineral wealth to China for processing over the option of processing here in South Australia.

The Olympic Dam expansion project BHP Billiton described in its draft EIS contained its selected option for processing ore being:

Of the additional 1.8 million tonnes of copper concentrate to be produced from the open pit mine, 200,000 tonnes would be directed to the existing smelter which would be expanded to produce an additional 115,000 tonnes of copper cathode, bringing the total onsite production to 350,000 tonnes from 800,000 tonnes of concentrate. The remaining 1.6 million tonnes would be exported for offsite smelting facilities to produce 400,000 tonnes of copper.

For uranium oxide production, of the additional 14,500 tonnes to be produced, around 12,500 tonnes would occur at Olympic Dam on top of the current production level of around 4,500 tonnes, with the remaining 2,000 tonnes contained in the copper concentrate for export.

The EIS guidelines the Hon. Mr Parnell quoted from in his motion also say:

Ore from the proposed open pit is expected to have a lower copper to sulphur ratio than ore currently mined from the existing underground mine. All ore recovered will be processed to concentrate in processing facilities at the mine. The lower grade ore will likely require a two stage smelting option. Smelting capacity for the concentrate produced from ore recovered by the open pit may be produced at the mine or at another location;

That could potentially be outside the state.

To identify the relationship of the EIS to the project evaluation work, including descriptions of the alternatives investigated and the 'do nothing' option in the context of conceptual technological and locality alternatives.

And further, he quoted:

In so far as the economic assessment for the expanded project as described by BHP Billiton, the direct and indirect impact of the expanded project on the national, state, regional and local economies in terms of the effects of employment, income and production is to be discussed.

In relation to those comments of the Hon. Mr Parnell, I make the following observations. It is clear that offsite production of a refined copper product from concentrate was a real option being contemplated for the project, and as is apparent this was part of the description of the expanded project and consequently the basis of the economic assessment undertaken and presented in the draft EIS.

Further, it is also clear that there was to be distinction made between the level of information required in the EIS for the alternatives that were to be investigated, to be presented in a high level nature, being conceptual, technical and locality alternatives, rather than the level of information for an economic assessment of the described expansion proposal (that is, including off-site processing) for which approvals were being sought.

The Premier, in his news release dated 21 April 2011, said that the commonwealth government had determined, in consultation with the South Australian government, that the supplementary EIS contained sufficient adequate information to enable governments to assess the proposal. It was the government's view then, and it is the government's view now, that BHP Billiton's EIS contained an appropriate level of information for assessment purposes.

BHP Billiton was obliged to thoroughly consider the economic, social and environmental impacts of the expansion proposal that it described in the EIS. The guidelines did not require BHP Billiton to investigate and describe the impacts of all the project options it considered, and the Hon. Mr Parnell's interpretation and, perhaps, his expectation otherwise, I would propose, is misguided.

It is the government's view that the information provided does enable a reasonable person to understand the reasons why BHP Billiton selected the processing option outlined above. I also note that Olympic Dam is the only copper mine in South Australia and Australia that produces copper cathode on site at the mining operation, and one of two in Australia that process beyond the concentrate stage.

It is also worth noting that of the 2.4 million tonnes of copper concentrate that would be produced, one-third would be smelted and refined on site to produce 47 per cent of the total contained copper output, with 90 per cent of the uranium oxide concentrate also produced on site, as I have been advised. On this basis, government members will not be supporting the proposed resolution.

The Hon. J.M.A. LENSINK (19:53): I rise to make some remarks on this particular motion, which has as its intention that the processing of uranium concentrate is done domestically rather than exported. It is critical of the lack of detail contained within the EIS and also calls the bluff of the state government in its express comments in 2007 that it would 'strongly oppose any moves by the company to do most of the processing of minerals from the expanded Olympic Dam mine overseas.'

I note, from his supporting speech, that the Hon. Mr Parnell states that BHP Billiton needs to provide its costs so that an assessment of its claim can be validated. He also outlines in some detail Premier Rann's hypocrisy in demanding in 2007 that processing take place locally, which he has, strangely, gone very quiet on.

I think disclosure is a very important part of this process. For that reason, I sought from one of our ministers in this chamber today information about the assessment report which will contain all of the agency reports responding to the EIS and the supplementary EIS, which I think needs to be released publicly posthaste because that is really going to inform us of the main game, which is the indenture proposal.

I can understand that the honourable member will continue to put these sorts of motions up, seeking information and for this chamber to endorse a certain action, but I think that what we really need with the timing is to get more details about the indenture and to get all the details that are contained within the assessment report which is being put together by the Department of Planning and Local Government posthaste. I understand that that was provided to cabinet two weeks ago. Clearly, it is absolutely critical that members of this chamber are made informed of that so that we can make an informed decision.

The major problem that I have is in part two of the member's motion which is where he calls on BHP Billiton to publicly release those details because I think there may be issues of commercial in confidence. So, while I think we need disclosure on a great number of details, I do appreciate that there may be some aspects of it that may not be in the best interests of the project to be made public, not because the company has anything to hide from us or from the people of South Australia but from its competitors. I have sought some details from BHP Billiton as to what their response would be and they have made the following comments which I will read into the record:

The Draft EIS and Supplementary EIS provided detailed explanations of the preferred option for the processing [of] ore and the reasons why other options were rejected. By providing the company with permission to publish the Supplementary EIS at the conclusion of the adequacy test process in early 2011, the State and Federal Governments declared this assessment was adequate for assessment.

I guess in that sense they are making the point that they have done everything they have been asked to do, so I think they would probably make the point that, if there is any fault in that process, then the government should have asked for other details. It continues:

As outlined in the Draft EIS, very few mining projects extract and process ore to final product at the same site. This is because it is difficult to match the operating parameters of an on-site smelter with the changing mineralogy, grade and volumes of ore being extracted from the mine. The result often requires ore to be stockpiled and blended in an attempt to produce a more consistent feed to the smelter, or to have the smelter operating below capacity and therefore inefficiently. Creating the ability to choose the volume and grade of ore sent to the on-site smelter and exporting the excess as copper concentrate would provide Olympic Dam with greater operating efficiency.

The option to construct a new plant at Olympic Dam to process all recovered ore was not the preferred option because:

this would require an additional smelter to be constructed at Olympic Dam and the additional cost for the additional smelter would not provide the optimal return on investment

the lower copper grade and lower copper to sulphur ratio of the ore body to be mined for the proposed expansion would necessitate different smelting technology from that currently used at Olympic Dam (ie two-staged smelting instead of single-staged smelting), thus increasing the complexity of on-site metallurgical processing by running two smelters with different technologies.

I must admit that in reading that there are clearly a lot of issues that are to do with chemistry which are probably beyond the expertise at least of this parliament and, therefore, goes to the point that I have made earlier which is that the assessment report is absolutely critical and we would like to have it as soon as possible please, Mr Government.

The final point that I would like to make is that there are some who would probably say that, knowing the Greens' staunch policy of not wanting to mine uranium—and this is perhaps a fairly cynical suggestion—that they will seek to put up barriers to this project until (if all of those barriers were accepted) the project would basically fall over and be financially unviable. I am not necessarily wedded to that point of view but it is certainly a view that people in our community hold.

With those comments, I do endorse the desire of the mover of the motion for greater transparency but, due to the fact that there may be issues with commercial-in-confidence matters, we will not be able to support the motion.

The Hon. M. PARNELL (19:59): In concluding the debate on this motion, I would like to thank the Hon. Ian Hunter and the Hon. Michelle Lensink for their contributions, and I will just reflect very briefly on both of them. First of all, in relation to the Hon. Ian Hunter's contribution on the part of the government, the numbers that he quoted—the various tonnages—do make the point that the company's intention is for the vast bulk of the job-rich components of this project to be outsourced beyond the borders of South Australia, most likely to China.

The Hon. Michelle Lensink made the point that, in relation to that lower grade ore, there is a great reluctance on the part of the company to want to invest in new smelting technology that could be necessary to process that ore. I disagree with a couple of points the Hon. Ian Hunter made. He first of all believes (or the government believes) that the appropriate level of information has been provided. What I say is, well, if that is the case, where is it? It is not in any of these thousands of pages of documents.

He makes the point that they were not obliged to put the same level of detail into options that they rejected compared with the option that they have accepted, but I do not think that is satisfactory when we are talking about the biggest project this state has ever seen and we are talking about non-renewable resources that are owned by the community, where the community expects to get maximum return from them. So, I disagree with the honourable member's assertion that the company has done enough. They have done what they were asked for.

He makes the point that we should somehow be pleased that this project is the only copper mine that is actually producing metal on site; I think it is fine to say that, but we should do more of it. The fact that other mines do not do it is no reason for us not to do it. As I say, these are South Australian resources, and South Australian jobs can be created if we insist on local processing.

The Hon. Michelle Lensink referred to the pending indenture legislation and highlighted the importance of that, and I agree with her entirely. That is going to be a very important bill that is presented to this parliament, and we are going to have to scrutinise it in great detail, but what I would say to the honourable member is that if we wait until we see that legislation it will be far too late.

The Hon. J.M.A. Lensink: I want the assessment report.

The Hon. M. PARNELL: The honourable member says that she wants the assessment report and, again, I agree with her there. I want to see it as well, but if we wait until we get the assessment report and we get the indenture bill presented in parliament it will be too late. The company will certainly claim that it is too late to go back to the drawing board, as they will see it, and have to explain to us why they did not adopt the option that created the most jobs here.

In relation to arguments of commercial confidentiality, I know that my motion does not infringe that. Basically calling on the government to require BHP Billiton to publicly release further detail, including economic modelling, does not mean that every single piece of financial analysis they have done in relation to the whole project needs to be presented, but what we have not seen expressed honestly is the simple economic principle: workers in China get paid less than workers in South Australia and that is why the company does not want to process here. They do not want South Australian workers to be paid Australian wage rates. I do not think there are commercial confidentiality issues in presenting a broad economic model that shows why it is they are going down the path they are.

The Hon. Michelle Lensink quoted from the BHP Billiton response and made the point that if there is any inadequacy in the information then the government should have asked for it. The government should have insisted on it. I agree. The government should have and did not. The Hon. Premier Mike Rann back in 2007 should have insisted on the level of monitoring because back then he was very prepared to tell the South Australian people that the China option was unacceptable for South Australia, so I agree that the government should have asked for more information but it did not. Therefore, I am leaving it to the Legislative Council to do the government's job and to ask for that information.

The letter from BHP, that the honourable member quoted from, made it very clear that BHP Billiton does not want to build a new smelter here in South Australia because they will not make as much money if they do it that way. This is at the heart of the entire debate. Is the exercise assisting BHP Billiton to make as much money as it possibly can, or is the object of the exercise allowing a mining company—whether it is BHP or anyone else—to make a reasonable profit, but also recognising that the resource belongs to South Australians and the South Australian community has an expectation of a decent return?

As I say, these are our minerals. You can only dig them up once, you can only process them once, and we should be doing it in South Australia rather than in China. I think this motion has great deal of merit and I would urge the council to support it.

Motion negatived.