Mining giant BHP Billiton has approved $1.2-billion pre-commitment capital for the first phase of its Olympic Dam project the first phase expansion of the Olympic Dam in South Australia.

With this, the project moves closer to board approval after the South Australian government signed off on the plans.

The miner has signed an indenture with the South Australian government for expansion of the Olympic Dam mine into the largest open cut mine in the world.
 
Under the agreement, BHP has guaranteed to spend at least $1.2 billion in the year following the passage of the required legislation through the state parliament, where it would be introduced on Tuesday.
 
The signing of the deal was the main milestone premier Mike Rann set for himself before stepping down.

According to the Greens, the decision to clear the world's largest copper and uranium mine would cause enormous harm to public health.

The Olympic Dam mine expansion has received environmental approval from the federal, South Australian and Northern Territory governments.

The mine expansion near Roxby Downs has also been approved under the Environment Protection and Biodiversity Conservation Act.

However, according to Greens spokesman Scott Ludlam, the giant tailings dam being planned by BHP Billiton for the expansion would eventually contain millions of tonnes of carcinogens, a prospect that would raise doubts over whether the crucial Indenture Act would pass the South Australian Parliament.

However, according to federal environment minister, Tony Burke, his approval came with 100 environmental conditions. He said the ministry had imposed the toughest environmental conditions even imposed on uranium mine.

According to Burke, the conditions would apply for 10 years after the life of the mine. The expansion of Olympic Dam would create 10,000 jobs-4,000 in mining and 6,000 in construction.

The influx of workers would necessitate the building of a new town alongside Roxby Downs.

While the state government would not release exact figures regarding the projected cost of the expansion, saying it would breach commercial in-confidence undertakings it was also rumoured to be worth at least $20 billion.

It would transform Australia's biggest underground mine into one of the largest open pit mines in the world.

Production of copper, gold and uranium would be boosted  six-fold.

According to South Australian Mineral Resources minister Tom Koutsantonis, despite the massive expansion BHP Billiton would not be allowed to draw more water than it already is from the Great Artesian Basin, instead relying on a new desalination plant near Whyalla.

A major concern about the project was whether the desalination plant would harm the nearby colony of giant cuttlefish and decimate the local fishing industry.

Koutsantonis said they had incorporated stringent environmental requirements for the plant but they expect this would not make everyone happy.

He added the ministry had also allowed EPA to license these approvals and there would be real-time monitoring.

He added if at any state the desalination plant were to leach saline water that breached those conditions the EPA would have the authority to shut down the desalination plant.

He pointed out that this was not the final approval in the process towards the expansion of Olympic Dam.