19/12/2008 - 09:30

OZ Minerals sheds a further 189 jobs

19/12/2008 - 09:30


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OZ Minerals will shed a further 189 jobs this week as it closes its flagship Avebury nickel mine in Tasmania due to the low price of the metal.

OZ Minerals will shed a further 189 jobs this week as it closes its flagship Avebury nickel mine in Tasmania due to the low price of the metal.

Earlier this week, OZ culled 135 jobs from its Century mine in Queensland.

Chief executive Andrew Michelmore said the company had been forced to make a hard decision given the financial challenges facing the company.

OZ Minerals, which was created with the merger of Oxiana and Zinifex in July, is struggling to refinance debt before deadlines that fall next week.

"In nine months, we've seen the nickel price drop by 68 per cent - an unprecedented fall in such a valuable commodity," Mr Michelmore said.

"This has severely tested the economics of many nickel projects worldwide, and Avebury is no exception.

"At these prices, it is simply more economical to keep this metal in the ground and resume production when prices improve."

Mr Michelmore said the decision was disappointing as the mine commenced production in August.

OZ Minerals said it would attempt to identify alternate roles within the group for the 64 employees and 125 contracts, mostly Barminco staff, who worked at the mine.

The company said some support and management personnel would remain on site until about the end of February to make the transition to care and maintenance.

It said it aimed to complete ore haulage and processing by the end of January.

Nickel sulphide concentrate sales from the mine are contracted to Chinese smelter Jinchuan Group.

"We are discussing the impacts with Jinchuan and we expect the life of mine supply agreements will continue when production resumes," OZ Minerals said.

Its shares remain in suspension as it considers offers to buy some of its assets or a capital raising to ease liquidity issues.

OZ Minerals said late on Thursday that its board was focused on resolving its financial situation as soon as possible so trading can resume.

"OZ Minerals has resolved to expedite all avenues available to address its short term liquidity position, and as such will consider approaches in respect of the acquisition of interests in any of its assets, or approaches from parties wishing to acquire some or all of the company's shares," chairman Barry Cusack said in a statement.

"We are also examining all options available for the issuance of new equity."

OZ Minerals shares were suspended from trading on November 28 and last traded at 55 cents.

The company is trying to refinance several debt facilities.

Two, drawn to a total of $US560 million ($A809.89 million), are due to be refinanced by December 29. Another is drawn to $85.5 million and is due to be repaid by December 31.

A fourth, for $US77 million ($A111.34 million), matures in 2011.

As at December 8, OZ Minerals' gross debt totalled $1.08 billion.

OZ Minerals also faces class action led by litigation funder IMF Australia in relation to its debt dislcosure.


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