OZMin says first copper from Carrapateena in 2019

OZ Minerals (ASX:OZL) is betting big on copper with plans to begin mining ore at its Carrapateena underground mine by 2019.

In a statement released on Friday, Australia's third-largest copper producer said it aims for output three years from now under a revised AUD$975 million construction plan – a far cry from the original plans back in 2014 for a project valued up to AUD $3 billion. The mine would produce around 67,000 tonnes of copper and 76,000 ounces of gold annually in its first three years.

The Australian reports Oz Minerals saying it plans to mine four million tonnes per annum, with copper concentrate coming in 2019. The overall spend includes a $150 million concentrate treatment plant at Whyalla, plus infrastructure and port options. The company is in discussions with Arrium Ltd., the owner of the port town's steelworks.

The project has been downgraded significantly from 2014, when a prefeasibility study had the mine, located 130 kilometres north of Port Augusta in South Australia and 100 kilometres south-east of BHP Billiton's copper-uranium Olympic Dam mine, producing revenues of more than $22 billion over its life at production costs of just $0.49 a pound of copper.

"We have reviewed in detail numerous copper-gold projects around the world over the past five years and there are very few like Carrapateena which offer the potential of multi-decade production at low operating costs," OZ Minerals’ former CEO Terry Burgess said at the time.

Australia's largest undeveloped copper deposit is estimated to contain 6.3 million tons of copper and 8.4 million ounces of gold, according to company filings.

The company almost sold Carrapateena back in April 2014, when OZ Minerals was courting interested buyers, having been hit by writedowns and production cuts, Bloomberg said.

However current CEO Andrew Cole was touting the strength of the company in the statement on Friday, noting that with “such strong financial metrics,” the company decided to start work and accelerate the prefeasibility, he said via Bloomberg.

In its full-year financials released in February, OZ Minerals reported a record year of production, bolstered by its 100,000 tonnes of copper per year flagship operation at Prominent Hill – generating a 168 percent increase in profits for 2015 and EBITDA of $484.9 million.

The news comes as copper begins another bearish trend, with the red metal plunging 6.7 percent last week, wiping out year-to-date gains entirely.

Growing demand from China – responsible for 46% of the global trade in the metal – is crucial for the copper market which is set to experience another year of oversupply albeit smaller than 2015's 350,000+ tonnes surplus which was the largest in several years. Primary mine supply grew more than 3% last year to just over 19 million tonnes.

The supply overhangs contrasts with a new report by London-based CRU, an independent mining, metals and fertilizer researcher, released last week, which paints a brighter picture of industry fundamentals and the copper price for the rest of the decade.