Costs up at OZ with Covid, weather

COSTS at OZ Minerals are expected to surge by 17 per cent this year while production will take a hit as bad weather, Covid absenteeism, outages and input inflation hit the copper and gold miner.

The Adelaide-based mining company said “attraction and retention pressure” for staff was also an issue, as its stock fell 1.4 per cent on the news on Monday.

OZ said it had a “softer start to the year” due to staff sickness and weather, as well as “further material handling system and equipment availability issues at Carrapateena’’.

The company’s all-in sustaining cost guidance has been increased by 17 per cent due to the lower production as well as current cost inflation of about 8 per cent.

Production at its Carrapateena mine in South Australia’s Far North is expected to be about 13 per cent lower than previously forecast.

The company’s main producing assets are the Carrapateena and Prominent Hill copper and gold mines in SA, while it also has a copper production hub in Brazil.

OZ said a number of factors were feeding into the lower production forecast.

“Covid absenteeism and flooding that affected both Australian assets during the first quarter resulted in lower first quarter production rates,’’ it told the ASX in a statement. “Remediation programs were established at both Prominent Hill and Carrapateena.

“However, Carrapateena’s remediation plan has been adversely impacted by further conveyor belt issues on the material handling system (resulting in a reduction of circa 4300 tonnes of copper metal produced), as well as ongoing resourcing and supply chain issues impacting equipment availability.’’

OZ managing director Andrew Cole said the second conveyor belt issue had frustrated delivery of Carrapateena’s remediation plan.

The company’s full year forecast for all in sustaining costs was up from US135CUS155C per pound of copper to US160C-US180C. OZ shares were 1.4 per cent lower at $18.92 in Monday’s early trade.