Oz Minerals to Cut Back Century Zinc and Delay Projects

Australia-listed miner Oz Minerals Ltd plans to cut production at the world's second-largest zinc mine, delay copper and gold projects and is renegotiating its debts after a major slide in metal prices. Oz Minerals, born out of the recent merger of Oxiana and Zinifex, said on Tuesday it would cut production at its loss-making Century zinc mine in northeast Australia by almost 4% to 495,000 tons in 2009 from a forecast 515,000 tons, despite some advice to keep the mine running at full speed.

"I am aware that some analysts and investors believe we should defer the cut-back (to Century), but it is not in the best interest of the company to do so," Oz Minerals chief executive Andrew Michelmore said in a statement.

The firm also said it would delay the planned expansion of its Sepon copper mine in Laos, which would have taken production there to 80,000 tons a year from 60,000 tons.

It was also suspending work on its Martabe gold-silver mine in Indonesia and defering development of open-cut copper mining at its Golden Grove mine in west Australia.

In sharp contrast to early this year, when buyers scrambled to secure limited supplies of copper, zinc and other industrial staples, the global financial crisis has left demand in tatters.

Increasingly, suppliers have been forced to cut production runs, according to Evy Hambro, manager of the BlackRock World Mining Fund, the world's largest commodities fund.

"It doesn't matter which commodity you are exposed to, they all are doing it tough," Hambro told reporters in a briefing moments before the Oz Minerals statement.

Oz Minerals, a major supplier of zinc, copper, lead and nickel to China, said it was also in talks with creditors to refinance debt.

Last month, it said costs at the Century mine were running at around $0.69 a pound, compared with current selling prices of around A$0.54 a pound on the London Metal Exchange.

The latest changes would cut spending by A$185m ($120m) in 2009, the company said, adding it was still looking at other ways to make more savings.

Oz Minerals stock fell nearly 3% to A$0.50 after the news, bucking a 4% gain in the wider market.

By James Regan; editing by Mark Bendeich Reuters.