BHP Billiton believes copper will be in short supply by 2020 and plans to ramp up its South Australian mine, but planned cost savings will be met by more job cuts.
BHP Billiton forecasts that the Olympic Dam mine will be operating at record rates within a year. The mining giant said on Wednesday the South Australian mine would produce more than 200,000 tonnes per year sustainably by 2016 and reach 220,000 tonnes annually by 2019.
Last year proved to be Olympic Dam’s best year when it produced 184,000 tonnes of copper.
BHP said the extra production will be achieved by accessing the southern zone of the giant ore body, and will help reduce the mine’s cost base by $US400 million ($555 million) per year.
However, BHP revealed $US120 million of those annualised savings would come from job cuts as 36 per cent of workers at the mine would go before 2017.
The miner has already shed 380 jobs this year.
BHP expects its copper production guidance to stay at 1.5 million tonnes in the 2016 financial year.
The southern zone of Olympic Dam should not be confused with the long-deferred expansion of Olympic Dam, which BHP said could take annual production to 425,000 tonnes by 2025, if approved by the board in the next few years.