BHP’s plans for a $3 billion expansion of its Olympic Dam project in South Australia’s north have been granted major development status by the state government.

The government’s move, gazetted on Thursday, clears the way for the company to increase annual copper production from 200,000 to 350,000 tonnes.

It also allows it to boost gold, silver and uranium production and to lift water extraction from the Great Artesian Basin to a maximum of 50 megalitres a day.

“Declaring BHP’s proposed expansion of Olympic Dam a major development is a key milestone in this important project,” Mining Minister Dan van Holst Pellekaan said.

“Olympic Dam is already the state’s largest mining operation, providing jobs, investment and royalties for South Australia.

“(This is) a very important project that, if it goes ahead, would contribute 1800 additional jobs in South Australia during construction, and another permanent 600 jobs on site at Olympic Dam.”

But the minister said the project was still subject to thorough assessment, particularly the plan to extract more water.

“All potential environmental impacts, potential social impacts, potential economic impacts will be considered incredibly thoroughly,” Mr van Holst Pellekaan said.

Local communities will also be consulted on the company’s plans.

Mr van Holst Pellekaan said it would be several years before an expanded mine could begin operation.

The state government’s declaration also covers BHP’s development plans outside the mining lease, including proposals for extra accommodation.

The proposed expansion of Olympic Dam has had a chequered history after first being mooted by the previous owners, Western Mining, back in 2002.

BHP initially proposed a $30 billion expansion, including development of one of the world’s largest open-cut mines, but put the plans on hold in 2012.

The company has since been looking at lower-cost, smaller-scale, alternatives to its original proposals.