OZ Minerals to Cut Zinc Production Up to 40% at Mine (Update2)
bloomberg.com
By Jesse Riseborough
Sept. 18 (Bloomberg) -- OZ Minerals Ltd., the world's second- largest zinc mining company, will cut output at its third-biggest zinc mine as much as 40 percent next year after prices declined.
``Current prices provide no economic incentive for us to continue to mine zinc at historical production levels,'' Andrew Michelmore, Chief Executive Officer of Melbourne-based OZ, said today in a statement. The company will cut production in 2009 by about 50,000 metric tons of concentrate.
The price of zinc has slumped 27 percent this year, prompting global mine closures, job cuts and delays to expansions. OZ Minerals will switch concentrate output from its Golden Grove mine in Western Australia to produce more copper to benefit from higher margins for producing the metal used in wires and pipes.
``At current prices for copper and zinc, our decision to preferentially mine copper over zinc will result in slightly higher revenue levels and more substantially higher profit margins, as copper is a higher margin product for us than zinc,'' Michelmore said.
OZ Minerals rose 0.4 percent to A$1.385 on the Australian stock exchange at 11:55 a.m. Sydney time.
Teck Cominco Ltd. and Xstrata Plc in July said they will close their Lennard Shelf zinc mine in Australia. AIM Resources Ltd. in the same month said it stopped work on its project in Burkina Faso. Intec Ltd. closed its Hellyer zinc mine in Australia this month.
The company estimates zinc concentrate production from Golden Grove of between 80,000 tons and 85,000 tons following the cut, it said. Copper output will increase by about 14,000 tons to between 35,000 tons and 40,000 tons, the company said.
Largest Mine
OZ Minerals largest zinc mine is the Century operation in Australia's Queensland state where output in the 12 months ended June 30 was a record 521,471 tons. The Century mine operates at very low mining costs, Michelmore said in a June interview. OZ Minerals also owns the Rosebery mine in Tasmania state.
``We are not rescheduling any of our zinc production at Century or Rosebery at the moment because we have customer contracts that we have to honor,'' company spokesman Matthew Foran said today by phone from Melbourne. ``Where there is room for review, we obviously will review those but we have to do that in the context of the relationship we have with the customers.''
The metal for three month delivery on the London Metal Exchange jumped 1.7 percent to $1,750 a ton at 11:15 a.m. Sydney time.
To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net
Last Updated: September 17, 2008 22:16 EDT |
