World’s second-largest zinc miner to cut zinc production in favour of copper

OZ Minerals, the world’s second largest zinc miner, has announced plans to reduce zinc production in favour of copper at its Golden Grove mine in 2009.

“Current prices provide no economic incentive for us to continue to mine zinc at historical production levels”, said Andrew Michelmore, MD & CEO of OZ Minerals.

OZ Minerals intends to reschedule mine production at Golden Grove in 2009 to reduce production of zinc in concentrate by approximately 50,000 tonnes, equivalent to a reduction of between 35% - 40% of current 2008 zinc production guidance of 130,000 – 135,000 tonnes. Expected zinc in concentrate production from Golden Grove for 2009 is in the range of 80,000 – 85,000 tonnes.

OZ Minerals will simultaneously increase production of copper in concentrate by approximately 14,000 tonnes to between 35,000 – 40,000 tonnes for 2009.

“Golden Grove is a polymetallic mine, which gives us the capability to vary the mix of copper and zinc we produce”, said Andrew Michelmore. “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.

“Re-scheduling production as outlined will also enable us to retain a valuable zinc asset that we will mine in the future when the zinc market returns to levels that more accurately reflect underlying supply and demand fundamentals”, he added.

“We have not at this stage rescheduled zinc production any further at Golden Grove or at any of our other operations because we have a duty to ensure our long-term customers are not disadvantaged”, said Mr. Michelmore. “However”, he continued, “we will always have the long-term economic interests of our shareholders uppermost in our decision-making.”