BHP Billiton (ASX: BHP) has reached a four-year collective industrial agreement with workers at its Olympic Dam mine in South Australia. The miner said the certainty and stability provided by the deal would be a key for the BHP board to decide on its $30-billion expansion plan.

The agreement provides for a 25 per cent increase for shift loadings and 1.5 per cent hike in employee superannuation contributions to 13 per cent from 11.5 per cent. However, there is no set yearly pay rises but it locks in individual pay arrangements.

BHP encouraged Olympic Dam employees with individual Australian workplace agreements (AWAs) to end their individual deals and sign the new agreement. Their AWAs are scheduled to expire in August 2013.

BHP recently temporarily placed on hold its Olympic Dam expansion plans due to rising costs in Australia and slump in commodity prices. The BHP board has until the end of 2012 to decide on its expansion plans for three major projects, including the Olympic Dam.

Deutsche Bank, in a research report, suggested that BHP sell part of its stake in Olympic Dam to the right partner to fund the expansion. Deutsche valued Olympic Dam at $14 billion but calculated its internal rate of return at only 11.3 per cent due to the large upfront cost needed to develop an open pit at its mine site.

"Given the size, low cash cost of the asset once developed, the strategic nature of the asset and the recent transactions in the sector, we think BHP Billiton could achieve a premium to our NPV," The Wall Street Journal quoted Deutsche Bank.

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