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OZ approved to unlock West Musgrave potential

OZ Minerals has been given board approval to develop its fourth operating asset, the West Musgrave copper-nickel project in Western Australia, for direct capital investment of about $1.7 billion.

The go-ahead will unlock one of the largest undeveloped nickel projects in the world and, with expected lowest quartile costs, it is set to generate  about $9.8 billion undiscounted cashflow over its 24-year operating life.

OZ Minerals chief executive officer, Andrew Cole, said with all key regulatory approvals now in place, a number of relationship banks have provided credit approved commitment letters for a new $1.2b syndicated facility to support development of the project in addition to the existing facilities.

“We are also considering the option to selldown a minority interest in the project to a strategic partner building on the significant in-bound interest we have received over the past six months,” he said.

“In addition to the 80 per cent renewable energy sourced from wind and solar for power generation, the project scope includes a pathway to net zero scope 1 emissions by 2038, aligned with the potential transition to an electric haulage fleet at the first engine change out, together with exploring other initiatives to reduce diesel and the application of offsets.

“Our project execution strategy will enable us to mitigate industry-wide cost inflation being experienced globally. An increase in direct project capital to about $1.7b is offset by a substantial increase in project value and results in stronger cash flow generation of about $1.9b during the first five years of production.

“To further manage inflationary pressures, we have increased our contingency allowance to about $190 million and our construction schedule allows for first concentrate in H2 2025.”

OZ Minerals chairman, Rebecca McGrath, said the board’s approval of West Musgrave was a fundamental step towards realising OZ Minerals’ strategy to evolve into a modern minerals producer set to supply global copper and nickel markets as the world moves into the de-carbonisation and electrification era.

“Key to the announcement is the support for the project by the Ngaanyatjarra people, with the signing of the Land Access Agreement after more than five years of collaboration to facilitate a productive long- term partnership,” she said.

“The Board considered the value created for all stakeholders when making the final investment decision. We can see the enormous potential of this project for:

  • our workforce in a modern flexible working environment
  • the local community in economic and wellbeing opportunities
  • our shareholders in realising our growth potential
  • governments in income from royalties, exports and jobs
  • customers who we will assist in meeting demand for minerals critical to the electrification and decarbonisation era
  • our suppliers who we look forward to working with to build a modern, low carbon emissions mine.”

Site mobilisation is set to commence next month. Long-lead items have been secured along with production slots and contract partners have been identified for 80 per cent of the material contracts.

The processing plant will be delivered by GR Engineering Services.

LOESCHE GmbH is a key technology partner and provider of the vertical roller mills that support high energy efficiency and low operating costs at West Musgrave.

The vertical roller mills will deliver a paradigm shift in minerals processing with unique operational flexibility and high energy efficiency.

LOESCHE managing shareholder Thomas Loesche said it had been a vision of his to develop dry-comminution technologies that enabled better sorting efficiencies, reduced power and consumables.

“We are very pleased to be involved in such an important project. OZ Minerals is breaking new ground and proving that sustainability does not stand in the way of project development, but rather makes such projects possible,” he said.

 

Editor of industrial titles and mastheads with Prime Creative Media. Publications include Rail Express and Australian Mining (web content).
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