“When it comes time to make that decision, we’ll have to be sure that we can deliver the project on time and on schedule,” he said. The Australian Financial Review Thursday.

“We will need to be able to get people in and out of the project site and Western Australia.

“Most of the people who would end up building West Musgrave are from the local WA area, but there are some who are overseas, there are some who are interstate, so an open border of WA would be very important to an investment decision on West Musgrave.

Nickel mining is a first

Mr Cole grew up in the coastal town of Mandurah, Western Australia, and said he hoped there would be certainty over WA’s border policy by the time OZ made its decision on West Musgrave.

“At the moment we are progressing at pace, assuming these things will be resolved by the second half,” he said.

West Musgrave is expected to operate for 26 years and OZ expects the mine to repay the $1.1 billion construction cost in the first six years of production.

The mine would be OZ’s first project in WA and its first push into nickel, given that its mines in South Australia and Brazil focus on copper and gold.

Exposure to nickel is increasingly sought after by investors who expect demand for the metal to grow due to its role in modern batteries that power electric vehicles and provide other types of energy storage. ‘energy.

Until now, plans for the mine have been based on the idea that it would export nickel, copper and cobalt in the form of concentrates, which would have to be smelted into the metal by third parties overseas.

Safer from COVID

But OZ is now considering whether it would make more economic sense to produce nickel metal on-site at West Musgrave, continuing a theme for Australian battery mineral producers to seek a larger share of the battery value chain and get closer to the end customers.

Low levels of the COVID-19 virus in South Australia in 2020 and most of 2021 have allowed OZ’s Prominent Hill and Carrapateena copper mines to thrive at a time when mines in the world’s largest copper producing nation , Chile, were hampered by high infection and absent rates.

A rise in infection rates in South Australia since December means OZ is no longer immune to these pressures, Mr Cole said the virus was responsible for absenteeism rates of between 5 and 10% these last weeks.

He said OZ had included certain assumptions about absenteeism rates in the production target set for 2022, which called for copper production to be 2% to 19% higher than last year.

However, gold production is expected to fall 3-12% and unit costs are expected to increase.

The ramp-up of the Carrapateena mine, completed two years ago, is largely responsible for the rise in copper production in 2022.

However, OZ slightly changed its medium-term outlook for Carrapateena, saying it would produce 68,000 tons of copper on average in each of the next four years.

This is slightly lower than previous forecasts of 70,000 tonnes per year.

Carrapateena’s gold production will be higher over this period than expected, but the change in outlook combined with “market conditions” prompted OZ to raise the mine’s unit cost forecast by 40%.

While the new all-in sustaining cost forecast for Carrapateena of US$1.05 per pound over the next four years still compares very favorably to Thursday’s copper price of US$4.43 per pound, the analyst RBC’s Kaan Peker said Thursday’s update would trigger “some” sentiment towards OZ stocks.

Extraordinarily heavy rain in outback South Australia over the past week has also disrupted OZ, although Mr Cole said he did not expect the rain to affect the forecast of the company’s copper production for the coming year.