Premier Jay Weatherill says the decision by BHP Billiton to defer the Olympic Dam expansion is disappointing for towns such as Port Pirie.
The company announced today that it would be looking for a cheaper alternative that is less capital intensive.
BHP chief executive officer Marius Kloppers blamed market conditions for the decision, including commodity prices.
Premier Weatherill also said today that the decision was based on market factors outside the Government's control.
But this comes after Minister Tom Koutsantonis said in Port Pirie earlier this month that copper prices were relatively stable and there was "nothing going on today
that we didn’t know about last year when we signed the indenture".
Premier Weatherill said there was "no doubt this is a major disappointment for South Australia and the workers and businesses who were planning to work on the project.
"It is also a particular disappointment for the regional towns like Roxby Downs, Port Augusta, Port Pirie and Whyalla who had started to experience the benefits in activity that this expansion was bringing."
Mr Weatherill said he had been told by BHP that they wish to proceed with the expansion.
"They have told me that they need to do this in the coming years because the life of the underground mine is finite, and there are clear advantages to them of retaining the environmental approvals that are already in place," he said.
Mr Kloppers said it became clear as they finalised details of the project that studying a less capital intensive option was the right decision for the company and its shareholders.