Answer on royalties once project is fully operational. Doesnt include the tax benefits of an additional 25,000 jobs.
ROYALTIES worth $350 million a year will flow into the state's coffers the agreement reached yesterday for the Olympic Dam mine expansion.
And the expansion of the world's largest mine will also create more than 25,000 jobs.
As a result of the deal signed in Melbourne by Premier Mike Rann and BHP Billiton chief executive Marius Kloppers, the mining giant has given a $1.2 billion pre-commitment to buy trucks and accommodation, and to provide early site works for the new mine site.
The majority of the pre-commitment capital is conditional on the successful passage of the indenture through the SA Parliament. Mr Rann will introduce the deal for parliamentary approval next week but Opposition Leader Isobel Redmond said she would not accelerate its passage to meet the Government and BHP timelines.
The $30 billion mine expansion will generate up to 6000 new jobs during construction, a further 4000 full-time positions at the open pit mine and an estimated 15,000 new indirect jobs.
This could include about 6500 jobs in Whyalla, Port Augusta, Port Pirie and Roxby Downs.
But under a sunset clause the State Government wanted written into the agreement, the company has one year from the time it is ratified by Parliament to formally begin the expansion.
After 12 months, the agreement lapses.
"Therefore we can expect project approval in 2012," Mr Rann said.
The Premier, clearly elated that agreement had been reached after 12 months of intense negotiations, said the new mine would eventually add about $8.6 billion a year to gross state product.
The current mine adds about $1.7 billion to GSP.
Business groups welcomed the announcement with Business SA chief executive Peter Vaughan saying it would provide a huge economic boost to the state for years to come.
Mr Kloppers said the company looked forward to having the indenture approved by Parliament and then his board could consider final approval for the project in the first half of next year.
Under the deal, BHP has committed to using South Australian suppliers, manufacturers and contractors for the expansion and will have to report annually on their use.
A key point of the agreement is that the company has also committed to double on-site processing of minerals at the site.
There had been fears in political circles that while the expansion would go ahead there was every chance the company would process much of the ore overseas which would have cost jobs.
"We are not cutting royalty rates to get this deal done," Mr Rann said.
"People were saying we would do a deal on royalties just to get the project to proceed.
"A higher royalty rate of 5 per cent was struck in the recent Budget and that will apply for uranium mined at Olympic Dam and 3.5 per cent for other metals such as copper, gold and silver."
Mr Rann said this would mean about $350 million a year in royalties from the expanded dam project.
He described the lengthy negotiations with BHP as "tough but dogged".
"This is going to be the world's biggest mine and naturally it's been tough," he said.
"I think it's a very good deal for the state. There have been a lot of tense moments along the way and I think ... all of us thought it was critically important that we get this sunset clause."
Mr Kloppers said he believed the agreement was a positive outcome for his company and SA.
"If approved, the project will generate significant new employment opportunities for SA in terms of direct employment, construction jobs and additional flow-on employment across the state for many years to come."
The first phase of the Olympic Dam Project to expand the mine is currently in feasibility and its progression into execution remains dependant on the completion of all required studies and board approval, likely next year.
"The pre-commitment funding is another important milestone in the development of this world class ore-body," Mr Kloppers said.
"Given the quality of this resource, the Olympic Dam Project team is completing studies to create one of the world's largest open-pit mines with the potential to increase copper production from around 180,000 tonnes per annum to 750,000 tonnes per annum - and beyond."
This week, BHP received environmental approvals for the project from the South Australian and federal governments, after assessment of its Environmental Impact Statements.