The declaration is the first step in a comprehensive state and federal process that includes assessment of potential social, economic and environmental impacts associated with an increase in mining and production at Olympic Dam from 200,000 tonnes per annum of copper to up to 350,000tpa.
BHP Olympic Dam asset president Laura Tyler welcomed the decision.
"BHP is aiming to achieve stable operations and sustainable growth at Olympic Dam through a staged and capital-efficient approach over the long term," she said.
"Olympic Dam is a world-class resource with the potential to deliver value to BHP and South Australia for many decades to come, especially given our positive outlook for global copper demand."
Tyler said the scope for the Southern Mine Area underground development, and investment in processing, infrastructure and technology, was still being refined.
Board approval for the growth project will be sought in mid-to-late 2020.
Olympic Dam mine is the only operation in BHP's portfolio that doesn't currently generate double-digit returns, something the company is determined to turn around.
In last November, the company reported a surprise copper discovery 65km from Olympic Dam.