BHP plans 3-year Olympic Dam process trial from late 2016

MELBOURNE, July 28 (Reuters) - BHP Billiton (NYSE: BBL - news) plans to run a three-year trial of a potentially cheaper way of processing copper and uranium from its massive Olympic Dam mine in Australia from late 2016, it said on Monday.

The proposal is BHP's first indication of expansion plans for Olympic Dam since it shelved a $20 billion plan to dig an open-pit mine to quadruple output in 2012 due to soaring costs and weaker copper and uranium prices.

BHP said at the time it would investigate cheaper ways to expand the mine, the world's fourth largest known copper deposit and biggest uranium source, and has been running a range of technology trials to improve the economics of the project.

On Monday it said it was applying for approval from the Australian and state governments to build and run a demonstration plant to use heap leach technology to extract copper and uranium from ore mined underground.

If approved, the company said it expected to start building the plant in July 2015 and would start a three-year trial in October 2016, treating 36,000 tonnes a year of material from the underground mine.

That would be less than 0.4 percent of the total ore produced at the mine.

BHP declined to comment on whether the trial meant any decision on expanding Olympic Dam would be put off until at least early 2020.

Based on smaller trials, BHP believes that by using heap leach technology at the beginning of ore processing, rather than in a late stage as it now does, it could cut costs at Olympic (BSE: OLPCL.BO - news) Dam, it said in its application.

BHP CEO Andrew Mackenzie has said he would update the market later this year on the company's plans to expand Olympic Dam. (Reporting by Sonali Paul; Editing by Richard Pullin)