ASX-listed OZ Minerals has lowered its total yearly copper production guidance for 2022 to reflect a softer start to the year. The guidance was lowered from between 127 000 t and 149 000 t to between 120 000 t and 135 000 t.

The company attributed this to Covid-19-related absenteeism and adverse weather conditions in the first quarter that resulted in flooding at the group’s Prominent Hill and Carrapateena assets, both of which are in South Australia.

OZ also blamed the lowered production guidance on materials handling system belt damage at Carrapateena during the second quarter, in addition to ongoing equipment availability issues, which have resulted in the mine’s copper production guidance being lowered by about 13%.

The group’s all-in sustaining cost guidance has simultaneously been increased by 17% owing to the lowered production in addition to current cost inflation of about 8%.

OZ said that remediation programmes had been established at both Prominent Hill and Carrapateena.

“Prominent Hill production has increased thus far, quarter-on-quarter, as the remediation plan begins to take effect and, pleasingly, the Carajás East hub [in Brazil] is outperforming expectations,” OZ MD and CEO Andrew Cole said.

The group said that the remediation plan at Prominent Hill meant that yearly copper production was expected to end up at the lower end of the tightened full-year guidance range. The group’s Carajás operation was on track to produce at the higher end of its unchanged guided range.

However, Carrapateena’s remediation plan was foiled by conveyor belt issues on the materials handling system, resulting in a reduction of about 4 300 t of copper metal produced, as well as ongoing resourcing and supply chain issues that were impacting equipment availability.

“Opportunities have also been identified in a reset plan to achieve greater operational consistency and reliability [at Carrapateena], including improving equipment availability and resourcing. At Carrapateena we continue to balance short term production goals while prioritising cave management to preserve and maximise the mine’s multi-decade value,” Cole said.

OZ noted that encouraging cave movement continued during the second quarter.

The more comprehensive operational reset plan was expected to lift production rates in the second half of the year. This was aimed at driving Carrapateena towards achieving a revised production guidance range of 55 000 t to 61 000 t of copper for the year. Carrapateena’s longer-term guidance to 2025, however, remained unchanged.

OZ said that its group unit costs were impacted by the lower production at the Australian assets and the 8% industry cost inflation across all assets, which persisted into the second quarter. Key inflationary impacts were on labour, transport, fuel, explosives and ground support.

The Australian assets were under a fixed price electricity contract and, as a result, remained unaffected by east coast electricity price increases for now.