BASE METALS

Oz Minerals increases copper shipments to Olympic Dam

The increase means more than 10% of the miner's total output is being sent to BHP Billiton's mine, to feed its massive smelting facility

SYDNEY (Reuters)  - 

Australia's Oz Minerals Ltd (OZL.AX: Quote) has lifted its shipments of copper ore to BHP Billiton's damaged Olympic Dam mine to more than 10 percent of its total output, Oz Minerals Managing Director Terry Burgess said on Thursday.

The shipments from Oz Minerals' nearby Prominent Hill mine were being used to offset a 75 percent drop in concentrate feed to Olympic Dam, the world's fourth largest copper deposit.

BHP (BHP.AX: Quote) (BLT.L: Quote) was forced to shut down the main haulage shaft at Olympic Dam in October after a breakdown of the haulage system

"We've increased the amount of concentrate shipments there for the foreseeable future," Burgess told a media conference.

"We're shipping a little more than 10 percent of our total at the moment because of their (BHP's) increased demand," Burgess said.

Shares in Oz Minerals last traded up 4.1 percent at A$1.27.

The Prominent hill mine produced 61,964 tonnes of copper contained in concentrate in the first quarter and 69,388 tonnes in the previous quarter for yields of 31,909 tonnes and 36,497 tonnes of copper metal respectively, company figures show.

Under an earlier sales agreement struck when Prominent Hill opened in May 2009, Oz Minerals was supplying less than 10 percent of its concentrate to Olympic Dam.

BHP stood to lose 50,000 tonnes of supply -- a fourth of annual output -- from the mine if it did not purchase concentrates from outside sources to feed its massive smelting facility at the mine site while repairs were being made.

It has also been buying concentrates from other mining companies in Australia, according to metals traders.

BHP is targeting a return to full operating capacity by the end of June capacity by the end of the June 2010 quarter. The company is expected to provide an update on the repairs and production rates on April 21, when it releases its quarterly operations data.

A runaway skip, or ore carrier, forced the immediate shutdown of the underground mine's main transport system. It is using a smaller secondary system capable of handling only about 20 percent of haulage.

Burgess also said his company will begin exporting concentrates to overseas customers from a second port in Adelaide next week, which will reduce an abnormally high stockpile of concentrates.

The stockpile was built up during a period of heavy rain that delayed shipments through Darwin, about 3,000 kilometres (1,880 miles) away, he said.

" Concentrate stockpiles are expected to be returned to normal levels through increased shipments and sales by the end of June," Burgess said. (Reporting by James Regan; editing Gyles Beckford)

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