Oz Minerals (ASX: OZL) is the latest miner to fall victim to industry wide labour shortages, inflationary pressures and adverse weather conditions. It joins recent downgrades from names including Evolution Mining (ASX: EVN) and New Hope (ASX: NHC).
The copper major downgraded its 2022 production guidance to 120,000 - 135,000 tonnes of copper, down -5.5% to -9.4% from its previous guidance.
All-in sustaining cost guidance increased sharply, up 17% to US$1.60 - US$1.80/lb for copper. Factors including lower production volumes, adverse weather conditions, attraction and retention pressure on labour, and inflationary pressures were to blame.
The Carrapatenna Project, which accounts for almost half of Group copper production, was adversely impacted by further conveyor belt issues on the material handling system. Approximately 4,300 tonnes of copper production was lost, worth approximately 6-7% of the Carrapatenna's previous production guidance of 62,000 - 72,000 tonnes.
Oz Minerals said it hopes to revive production rates in the second half of the year with a ‘more comprehensive operational re-set plan’.
“Opportunities have also been identified in a re-set plan to achieve greater operational consistency and reliability, including improving equipment availability and resourcing,” said CEO Andrew Cole.
Copper prices have hit a 16-month low amid fears that rising interest rates and weak economic activity could flag a slowdown in industrial activity.
Copper was trading around US$4.56/lb in early June, and fell in rapid succession to US$3.7/lb.
Local copper names including Sandfire Resources (ASX: SFR) and 29 Metals (ASX: 29M) have cratered in the face of falling copper prices and rising costs.
Contrary to how prices are performing, copper stockpiles in LME warehouses sat at 120,775 tonnes in early June compared to 2m tonnes in January 2021.
Stockpiles are sitting at historically low levels, but prices seem more fixated on recession and demand concerns.
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