Lead Story
Issue No. 31 - October/November 2006
The Dirt on Resources
by Professor Dick Blandy
BHP Billiton's Olympic Dam's grand expansion plans stagger the imagination and have prompted hopes of a resources-led revival for South Australia. Whether or not this is possible depends not only on the Big Australian, but on the efforts and the fortunes of many satellite explorers and regions.
There has been a big increase in minerals exploration in South Australia in the last few years. What are the chances that South Australia will become a new minerals province to rival Western Australia?
This is a very important question for South Australia, because if it were to happen it would transform the State’s economic outlook from one of maintaining its share of the national economy to one of increasing its share of the national economy.
The mining industry in South Australia produces about 2% (about $1.3 billion, of which Olympic Dam produces about $1 billion) of the State’s gross state product. For comparison, the mining industry in Western Australia produces about 20% of WA’s GSP. If our mining industry were the same relative size as WA’s, it would add nearly $12 billion to our GSP. If we were to achieve this target by 2025, it would add nearly one percentage point per annum to SA’s growth rate over the next 20 years, raising it from about 3%pa to about 4%pa throughout the next 20 years.
To provide some idea of the scope of such an expansion, a comparison with production from Olympic Dam is instructive. The Olympic Dam expansion will result in something like an extra 2% being added to SA’s GSP, over and above its present contribution of about 1.5% of our GSP. To achieve the suggested overall mining target for SA would require the discovery (in annual production terms) of the equivalent of about five or six Olympic Dams, all producing at Olympic Dam’s expected expanded rate by 2025. This does not look very likely.
Olympic Dam was discovered in 1975 and went into production in 1988. Assuming ...
