Oz Minerals cuts zinc output at WA mine

Oz Minerals Ltd will slash zinc production at its Golden Grove mine in Western Australia by up to 40 per cent on the back of a falling metal price.

The miner, the combined entity following a merger between Zinifex and Oxiana, said it will now focus on increasing copper output at the Mid West mine, targeting up to 40,000 tonnes of copper production next year, a lift of 14,000t.

Zinc production will be cut by some 50,000t, lowering the miner's zinc production target to between 130,000t and 135,000t.

"Current prices provide no economic incentive for us to continue to mine zinc at historical production levels," managing director Andrew Michelmore said.

Zinc prices have fallen some 30 per cent this year, with the spot metal price last trading on the London Metal Exchange at $US1696 per tonne, down 1.8 per cent from the previous trading day.

Meanwhile spot copper prices are also down 1.7 per cent to $US6813/t, down markedly from recent highs of over $US8000/t.

"At current price for copper and zinc, our decision to preferentially mine copper over zinc will result in slightly higher revenue levels and more substantially higher profit margins, as copper is a higher margin product for us than zinc," Mr Michelmore said.

"Re-scheduling production as outlined will also enable us to retain a valuable zinc asset that we will mine in the future when the zinc market returns to levels that more accurately reflect underlying supply and demand fundamentals.

"We have not at this stage rescheduled zinc production any further at Golden Grove or at any of our other operations because we have a duty to ensure our long-term customers are notdisadvantaged."

Shares in Oz Minerals were up 0.5c to $1.385 at 12:56 AEST.