New power line to keep OZ Minerals connected

JOHANNESBURG (miningweekly.com) – Copper/gold miner OZ Minerals on Friday unveiled its power strategy, which includes a new high voltage power transmission line to secure electricity for the Prominent Hill and Carrapateena mines, as well as any future developments in South Australia.

“Infrastructure in the region does not support our current activities and future regional expansion plans. The new transmission line will meet the company’s operational requirements and enable its growth strategy for the region,” the ASX-listed company said.

Infrastructure provider ElectraNet would build, own, operate and maintain the new transmission line. Renewable energy developer SolarReserve will share a section of the line’s construction and operation.

OZ Minerals has been forced to investigate an alternative power solution for its Prominent Hill mine, after BHP Billiton in August last year informed the company that it would not be able to share its Olympic Dam power line. The connection and access agreement would be terminated in August 2020.

“In developing [our power] strategy, we have addressed reliability, security and affordability for our current mining assets and enabled our ambitious growth aspirations for the region and beyond.

“The new transmission line will enhance security of power supply, reduce line losses and enable the execution of the Prominent Hill mine plan, Carrapateena operations and the exploitation of future optionality for district expansion at Carrapateena,” OZ Minerals CEO Andrew Cole said.

The cost impact of the new line would be a 3% to 4% increase in Prominent Hill’s life-of-mine all-in sustaining costs from mid-2020, offset by a 1% cost benefit at Carrapateena.

These cost estimates were based on SolarReserve’s development of its solar thermal generation and storage facility near Port Augusta. “The line will have the capacity for other users to draw power or input generation, which will improve the economics for other developments in the region and, as more users connect, OZ Minerals’ operating costs would reduce proportionately.

“Our approach to power procurement has vindicated our decision to sign a short-term, 18-month pricing agreement in 2017, as independent agencies are forecasting a downward trending power price market,” said Cole.

As a result, OZ Minerals has flexibility to commit to short-term or long-term contract pricing, or a combination of both, and consider generation source options as they become more affordable.

The power strategy also includes a modest on-site solar generation plant at Prominent Hill.

The miner said that elements of the second phase of its power strategy, comprising power procurement, generation and site energy saving initiatives, would be progressively developed.

In September 2016, a two-week outage cut off supply to Prominent Hill and Olympic Dam.