By Barry FitzGerald
OZ MINERALS has added its name to the growing list of mining companies ending their capital investment strike in response to the Gillard government's new deal on the resource rent tax.
The end to the strike by OZ - it was threatening to delay a decision on a $135 million underground development at its Prominent Hill copper-gold mine in South Australia - became a no-brainer when the revised resource rent tax excluded all minerals other than iron ore and coal.
As recently as June 10, OZ was saying that uncertainty about the federal government's now-scrapped 40 per cent tax meant development at Prominent Hill faced almost certain delay.
OZ chief executive Terry Burgess told a Melbourne Mining Club luncheon at the time that while the technical study into the project would be completed in June, he would not be able recommend to the board that OZ proceed ''until I can give them a full financial evaluation''.
Now that copper and gold have been excluded from the tax, it is all systems go at Prominent Hill. ''The decision to proceed has been able to be made in light of the decision to retain existing taxation and royalty arrangements for copper producers,'' OZ said yesterday.
Full production from the underground development is expected in the second half of 2012.
OZ said the underground position would also give it a better ''platform'' from which to test the prospective near-mine environment with drill holes in order to increase the known resources.
Earlier this month, OZ spent $100 million acquiring a 19 per cent stake in Sandfire Resources - owner of the high-grade Doolgunna-DeGrussa copper and gold project in Western Australia.
The acquisition (at an average of $3.87 a share) made OZ the biggest shareholder in Sandfire, ahead of South Korean steel giant Posco with its 17 per cent interest.
The acquisition is considered a precursor to a full takeover bid for Sandfire, on the assumption that the Doolgunna-DeGrussa deposit continues to shape up as one of the best recent discoveries. Sandfire shares last traded at $4.40 a share.
OZ has been on the lookout for project and development opportunities since being forced last year to sell most of its mines in a refinancing brought on by the global financial crisis.
The $1.1 billion Prominent Hill mine was all OZ was able to hang on to in last year's restructuring.