The Board of OZ Minerals has approved the final investment for the development of the West Musgrave copper-nickel Project for about $1.7 billion.
OZ Minerals Chief Executive Officer Andrew Cole said the investment proposal for West Musgrave unleashes one of the most significant undeveloped nickel projects globally, with the lowest quartile costs anticipated, the project is set to generate $9.8 billion undiscounted cash flow over its 24-year operating life.
“Along with the support we have received from the Ngaanyatjarra people and Western Australian government, with all key regulatory approvals now in place, a number of our relationship banks have provided credit approved commitment letters for a new $1.2 billion syndicated facility to support development of the West Musgrave Project in addition to our 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,” Cole stated.
According to Cole, the Project scope includes a path to net zero scope 1 emissions by 2038 in addition to the 80 per cent renewable energy produced from wind and solar for power generation. The approach is in line with the prospective conversion of the fleet to electric haulage at the time of the first engine replacement, as well as the investigation of additional initiatives to cut diesel use and the use of offsets, Cole added.
“Our project execution strategy will enable us to mitigate industry-wide cost inflation being experienced globally. An increase in direct Project capital to approximately $1.7 billion is offset by a substantial increase in Project value and results in stronger cash flow generation of circa $1.9 billion during the first five years of production,” he said.
OZ Minerals Chairman Rebecca McGrath described the Board’s approval as a critical step towards realising OZ Minerals’ strategy to develop into a modern minerals producer equipped to supply the world’s copper and nickel markets as the world enters the decarbonisation and electrification era.
“Key to today’s announcement is the support for the Project by the Ngaanyatjarra people, with the signing this week of the Land Access Agreement after more than five years of collaboration to facilitate a productive long-term partnership,” McGrath said.
After a lengthy debate and discussion, Ngaanyatjarra Council Group CEO Gerard Coffey stated they are glad to see OZ Minerals move on with this project, which has been looked at but not pursued by other mining firms in the past.
“We look forward to working with OZ Minerals in both the spirit and the letter of the agreements we have reached. Our aim is to improve the lives of our people by creating jobs and from ongoing income for the community while protecting our land and the things that are important to us. While we have increased our knowledge of what the mine will involve, this next construction phase will also be important for setting up how we will both work constructively together over the next decades,” Coffey added.
Following the announcement, the West Musgrave Project team will move forwards right away to award contracts to partners, expand the camp’s capacity by early 2023, mobilise equipment to start digging, finalise the PPA and Living Hub agreements, and raise the owner team’s resources in accordance with the plan, including personnel for operational readiness.
