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OZ Minerals eceived board approval to develop its West Musgrave copper-nickel project, which is set to generate almost $10 billion.

OZ Minerals’ quarterly report has been released, showing 124,065 tonnes of copper produced – below the 127,000-tonne minimum target.

The company has also warned that the cost of producing South Australian copper may rise a further 10 per cent in 2023.

With the upfront spend on OZ’s West Musgrave nickel project set to rise by at least $110 million, the company is encouraging shareholders to accept BHP’s $9.6 billion takeover offer when they vote in early April.

“OZ Minerals directors unanimously recommend shareholders vote in favour of the scheme pending the independent expert concluding, and continuing to conclude, that the scheme is in the best interests of shareholders and absent a superior proposal,” OZ Minerals managing director and chief executive officer Andrew Cole said.

BHP made an unsolicited offer for OZ at $8.4 billion in August 2022, with the agreed upon $9.6 billion being offered and accepted in November.

The miner started the year expecting that all-in costs would be no higher than $US1.55 a pound of copper, and as recently as 2020 the company’s unit costs were just US$0.56.9 a pound.

Aside from lower volumes, OZ blamed the higher costs on adverse weather, COVID-19 absenteeism, supply-chain disruption and inflationary pressure.

OZ Minerals chief financial officer Warrick Ranson said higher prices for consumables were looking to be the new normal.

“Generally our inflationary impact through the year has been around that sort of 10 per cent to 12 per cent, a little bit higher in some of the other areas,” Ranson said.

“That has sort of steadied. We are not really seeing any further uplift, but prices aren’t coming back down, so we are living with those higher price levels now.”

Ranson said higher electricity prices were a major factor in the company’s production costs after it was hit with a 60 per cent increase to power costs.