A spokeswoman for WMC Ltd told Reuters on Tuesday that its A$1.6 billion Olympic Dam expansion, which will add about 120,000 tonnes of copper to world supply, was on schedule to begin production progressively in the next couple of months.

Olympic Dam was well into commissioning phase, with grinding and crushing equipment complete and the company preparing for commissioning of the smelter. This was expected to be running by the end of the year, three months ahead of schedule, she said.

Olympic Dam was such a low cost mine that it was still economically viable as one of the lowest cost producers in the world, despite the market price collapse, she said.

She also said the decision to go ahead with the expansion was made two years ago when the commodity outlook was greatly different from the present one. And WMC was also keen to expand in theuranium market, with Olympic Dam a combined uranium-copper mine, she said.

Olympic Dam is just part of Australia's bold foray into copper expansion at the time of one of the worst price collapses in modern history.

It is being accompanied into production by 23,000 tonnes of copper a year from Newcrest Mining Ltd's Cadia Hill project in New South Wales and the 37,000 tonnes from Western Metal's Ltd's Mount Gordon mine in Queensland.

MIM Holdings Ltd is also bringing its A$293 million Enterprise mine progressively on stream to replace output from the Mount Isa orebody.

And it is proceeding with expansion of its Townsville copper refinery and Mount Isa smelter, which will both be producing at between 250,000 and 255,000 tonnes annually in the first quarter of 1999.

Both are on track to achieve this, an MIM spokesman said.

The refinery expansion, which will take capacity of the plant from its present rated ceiling of 210,000 tonnes a year, was now approaching completion, he said.

The refinery willbe further expanded to a capacity of 270,000 tonnes later in 1999.

Overall, the Australian Bureau of Agricultural and Resource Economics (ABARE) is predicting that Australia's production of copper will rise by 15.5 per cent to 670,000 tonnes in 1998/99 from 580,000 tonnes in 1997/98.

"The feasibility studies have been done and the capital committed... so they continue," one analyst said when asked if Australian miners were engaged in a great gamble by expanding production of copper, nickel and zinc as global markets slumped.

"It's a worry, especially with Japan looking so woeful and with the potential to look woeful for another couple of years," the analyst added.

With the LME copper stockpile up by 76 per cent in the last three months to 465,625 tonnes, the metal stands in sharp contrast with zinc, whose LME stocks were falling, and aluminium, nickel and lead, whose stock gains were slight.