OZ Minerals Studies Cheaper $557 Million Plan for Copper MineBy
Project is Australia's largest unmined copper deposit
Operation may begin output in 2019 as copper market improves
OZ Minerals Ltd., Australia’s third-largest copper producer, is studying plans for a lower-cost, A$770 million ($557 million) option to mine the nation’s biggest undeveloped deposit to supply a forecast global deficit.
The Carrapateena project in South Australia will have annual output of about 55,000 metric tons of copper and 58,000 ounces of gold in its first three years and may start production in 2019, the Adelaide-based producer said Friday in a statement. The revised proposal compares to an earlier estimate of as much as A$3 billion for a larger scale mine.
“Our plan for Carrapateena to become a world class project that generates strong returns has taken a big step forward,” Chief Executive Officer Andrew Cole said in the statement. OZ Minerals, which had initially said it would need a partner to develop the asset, will take a final investment decision in 2017. The producer separately announced a A$60 million on-market share buyback.
OZ Minerals fell 2.9 percent to A$5.08 at 10:32 a.m. in Sydney. It’s gained 26 percent this year.
A deficit is expected to develop in the copper market toward the end of the decade, BHP Billiton Ltd. said Tuesday. Declining output at existing mines make the supply fundamentals favorable for the red metal, according to Anglo American Plc, which said this month the material would be a core priority as it reshapes its portfolio. Copper for delivery in three months fell 0.9 percent Thursday on the London Metal Exchange to $4,601 a metric ton.
“The underlying long term fundamentals for copper remain very strong,” OZ Minerals said in its statement. Multiple forecasts expect demand to exceed production from operating mines and projects by the end of the decade, it said.
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