Oz Minerals says BHP to end power connection agreement

PERTH (miningweekly.com) – Copper miner Oz Minerals has been forced to investigate alternative power solutions for its Prominent Hill mine, in South Australia, after mining major BHP terminated a connection and access agreement.

Under the existing agreement, Oz Minerals’ Prominent Hill mine shares BHP’s power line from Davenport to the Olympic Dam operation. Oz Minerals owns the power infrastructure between Olympic Dam and Prominent Hill.

BHP has advised the ASX-listed miner that it will terminate the connection and access agreement from the end of August 2020.

The current term of the agreements ends in July next year, and Oz Minerals has the right to request an extension of ten years. However, BHP has reserved its position that the agreement will not be extended.

Oz Minerals told shareholders on Thursday that the agreement would need to be extended for a further term, with the company now considering its legal options to ensure continued access for at least the next three years.

In the interim, the company has been developing its own power strategy and will continue to progress a range of long-term alternative power options, which is expected to enhance the security of supply, reduce line losses and enable future mine expansion optionality at the Prominent Hill and Carrapateena mines.

Oz Minerals noted that while the energy options being considered would not affect guidance at the Prominent Hill mine between 2017 and 2019, it could result in an increase in the mine’s all-in sustaining costs of between 2% and 5% from mid-2020.

This was subject to the company maintaining access to the infrastructure during the three-year notice period.