UPDATE 3-Australia approves BHP's $20-$30 bln Olympic Dam mine expansion

* National and state governments approve expansion with conditions

* Enlarged copper and uranium mine to feed Asian growth

* BHP Billiton expected to give final go-ahead in 2012

By Sonali Paul and James Regan

MELBOURNE/SYDNEY Oct 10 (Reuters) - BHP Billiton moved closer to an estimated $20 billion to $30 billion expansion of its Olympic Dam copper and uranium mine after winning environmental approvals on Monday for the project in the deserts of southern Australia.

The approvals give BHP the green light to nearly quadruple the mine's copper output to 750,000 tonnes annually to help feed a growing market in Asia, especially China, where copper consumption is forecast to surge 6 percent this year.

BHP, expected to make a final decision in mid-2012, now has to weigh up the 150 conditions imposed by the national and South Australia state governments as part of assessing the mine's feasibility.

Once fully expanded, Olympic Dam would be on near-par with the massive copper mines of South America, though it would take years before it came close to matching the output of BHP's giant Escondida lode in Chile.

"It'll help balance the market and to that extent it's slightly bearish, but the market's been looking at this expansion for some time," said Citigroup analyst David Thurtell.

"I'm not sure whether anyone expected the Dam to be knocked back by the government."

The national and South Australia governments are keen for the project to go ahead because of the thousands of jobs it is expected to create.

As part of the conditions, BHP has agreed to set aside a chunk of land roughly the size of London as an environmental buffer zone and to monitor the impact of the mine on birds and fish inhabiting hundreds of kilometres surrounding the Olympic Dam mine site.

It will also construct a desalination project and pipes to bring seawater to the mine from over 300 kilometres away.

"The strict conditions I've imposed will help ensure protection of the natural environment, including native species, groundwater and vegetation, for the long term," Environment Minister Tony Burke said in a statement on Monday.

The proposal is also subject to independent reviews by the Australian Radiation Protection and Nuclear Safety Agency, since an expansion would also lift annual uranium production to 19,000 tonnes from around 4,000 tonnes now.

FEEDING CHINA'S DEMAND

Rio Tinto , which is helping develop Mongolia's giant Oyu Tolgoi copper mine and is partnership with BHP Billiton at Escondida, estimates total global demand for refined copper is expected to rise by more than 40 percent to 27 million tonnes by 2020.

BHP Billiton has yet to reveal the cost of the expansion, but analysts rank it as possibly the single biggest on the drawing board of the world's biggest miner, estimating costs of between $20 billion and $30 billion.

The project would require assembling one of the world's largest fleet of earth movers, with geologists estimating that it would take four or five years just to expose the ore body.

The expansion would also extend the life of the mine from about 20 years to more than 100 years.

Demand for refined copper in China has been increasing due to rapid development in telecommunications, power, equipment manufacturing, automobiles, construction and consumer goods.

Chile is currently the largest producer of mined copper, followed by other major producers such as Peru, the United States and Australia.

Thurtell said it may be too early to size up the impact of the Olympic Dam project on the global copper market.

"It's too far away, who knows what will happen to the market by then. Maybe the market might still be in deficit so it'll only partly fill the gap."

The South Australia state government said it aimed to finalise an agreement on royalties and infrastructure commitments for the expansion by Oct. 20.

Monday's clearances follow a six-year review of the expected impact of the expansion on everything from air quality in neighbouring towns to cuttlefish in the Spencer Gulf.

The company will need more than 600 licences and permits to meet these requirements.

BHP Billiton will also be allowed to expand its smelter, build an ore concentrator and other plants to process the additional ore and dump waste rock in a 150-metre high pile covering 67 square km (26 square miles).

The plan also includes an airport, gas-fired power station, 320-kilometre pipeline and a 105-km rail line.

The company has said it would put the project up for board approval in stages, with phase one, digging the open pit, up for sign-off around June 2012 and phase two, including building the concentrator, 18 months to two years later.

BHP shares slipped 0.3 percent on Monday, underperforming a 0.9 percent gain in the broader market.