OZ Minerals Ltd has placed a second operation on care and maintenance as the company battles to conserve funds and refinance $1 billion of debt.

The company has placed the Scuddles mine at its Golden Grove operation in Western Australia on care and maintenance, almost a month after taking the same action at the Avebury nickel mine in Tasmania.

The move will result in a cut in zinc output for 2009 by 25,000 tonnes to 55,000 to 60,000 tonnes and the loss of 70 jobs, or eight per cent of the workforce.

"What this decision means is that we will markedly improve the site's cost performance," OZ Minerals chief executive Andrew Michelmore said in a statement.

"This will allow us to ensure the long term sustainability of the operation."

Commodity prices have sunk amid the global economic downturn as demand slows, with many producers forced to cut output and shed jobs to remain competitive.

OZ Minerals estimates placing Scuddles on care and maintenance will improve operating costs at Golden Grove by $US15 million ($A22.10 million) and reduce total cash costs at the site.

The Gossan Hill mine at Golden Grove will continue to operate, with copper output expected to increase by 5,000 tonnes to 40,000 to 45,000 tonnes in 2009.

In September, OZ Minerals announced plans to reduce zinc output from Golden Grove by up to 40 per cent, or 50,000 tonnes, in favour of increasing copper production amid weaker commodity prices.

OZ Minerals, which is seeking to refinance $1 billion in debt by February 27, is pursuing a number of cost cutting measures to improve operating margins and conserve cash.

The company has cut zinc production from its Century mine in Queensland, deferred about $495 million in capital expenditure and is pursuing asset sales.

OZ Minerals is also attempting to arrange a bridging facility to cover expected cash shortfalls at a number of its operations, including Golden Grove.

Shares in OZ Minerals - formed last year through the merger of diversified miner Oxiana and zinc specialist Zinifex - last traded at 55 cents before the company entered a voluntary suspension in December.