Olympic Dam expansion vital to SA: Abbott

The proposed Olympic Dam mine expansion is vital to the economic future of South Australia, but the only way to make it happen is to abolish mining taxes, federal Opposition Leader Tony Abbott has told a state Liberal conference.

South Australia is a great state with a great future, but the proposed expansion of the copper and uranium mine will determine whether it becomes more like Western Australia or more like Tasmania, Mr Abbott says.

"This is a great state, but it is a great state at the crossroads," Mr Abbott told the state Liberal party conference in Adelaide on Saturday.

"If we want to ensure that South Australia is not permanently stuck in the slow lane of a two-speed economy, we have got to have the Olympic Dam expansion.

"That is vital for the economic future of the state."

BHP Billiton has until the end of the year to give the $30 billion expansion the final go-ahead or face the need to renegotiate approvals with the state government.

There is growing concern that global economic conditions will force the company to put its plans on hold, but South Australian Premier Jay Weatherill says he cannot see any justification for granting the mining giants an extension to their agreement.

Mr Abbott said the mine expansion was being threatened by the federal government's new mining taxes.

"The very best we can say of the Olympic Dam expansion is it is on a knife edge," he said.

"And the best thing that we can do in this country to ensure that that project goes ahead ... is to get rid of the taxes that stand in its way."

The Olympic Dam expansion would create the world's largest open cut mine, with annual copper production tripling to 750,000 tonnes and uranium oxide production rising to 19,000 tonnes.