OZ Minerals CEO Andrew Michelmore has defended the 2008 merger of Zinifex and Oxiana, saying the decline in global commodity markets is to blame for miner’s financial woes.
“There has been plenty of naïve speculation that the merger was a factor in OZ Minerals’ deteriorating share price and financial performance,” he said at a Brisbane Mining Club presentation earlier this week.
“Nothing could be further from reality. When we announced the merger we highlighted the many significant advantages that this bestowed on the new company.”
Michelmore pointed to the diversification of the company’s commodity base, the strength of the project pipeline and cash that became available to develop the projects as positive outcomes of the merger.
“All these reasons were, and remain, valid,” he said.
“What changed, and changed rapidly, was that market conditions and commodity prices collapsed, and we had to act very quickly to revise our plans and conserve our cash.”
OZ Minerals this week officially signed a US$1.2 billion investment deal with China Minmetals that will see the miner pay down its $1.3 billion of debt and come out with around $500 million in cash reserves.
After struggling to refinance the debt for several months from the end of last year, the new deal has been seen by the industry as a ‘get out of gaol free’ card.
“I remain convinced that despite all the difficulties OZ Minerals has had to endure, it was able to do so far better than either Oxiana or Zinifex would have been able to as separate companies,” Michelmore said.