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Central Asia MetalsA modern mining company
18 February 2020
The Manager, Companies
Australian Securities Exchange
Companies Announcement Centre
20 Bridge Street
Sydney NSW 2000
Dear Sir/Madam,
OZ Minerals 2019 Annual and Sustainability Report
OZ Minerals today announced its results for the full year ended 31 December 2019. Attached is the Appendix
4E and 2019 Annual and Sustainability Report including:
• Directors’ Report
• Remuneration Overview and Report
•
•
FY19 Financial Report
Sustainability Report
Sincerely,
Michelle Pole
Company Secretary and Senior Legal Counsel
This announcement is authorised for market release by OZ Minerals' Managing Director and CEO, Andrew Cole.
OZ Minerals Limited | ABN: 40 005 482 824 | 2 Hamra Drive, Adelaide Airport South Australia 5950
T: +61 8 8229 6600 | F: +61 8 8229 6601 | info@ozminerals.com | www.ozminerals.com
A modern mining company
RESULTS FOR ANNOUNCEMENT
TO THE MARKET
We have provided this results announcement to the market in accordance with Australian
Securities Exchange (ASX) Listing Rule 4.2A and Appendix 4E for the Consolidated Entity (OZ
Minerals) comprising OZ Minerals Limited (OZ Minerals Limited or the ‘Company’) and its
controlled entities for the year ending 31 December 2019 (financial year) compared to the
year ended 31 December 2018 (comparative period).
Consolidated results, commentary on results and outlook
Net Revenue
Profit after tax attributable to OZ
Minerals Limited equity holders
31 December 2019
$m
31 December 2018
$m
Movement
$m
Movement
%
1,107.0
163.9
1,117.0
222.4
(10.0)
(58.5)
(0.9)
(26.3)
The commentary on the consolidated results and outlook, including changes in the state of
affairs and likely developments of the Consolidated Entity, is set out in pages 8 to 18 and
within the financial review section of the Directors’ Report (page 24).
Net tangible assets per share
Net tangible assets per share
31 December 2019
$ per share
8.66
31 December 2018
$ per share
9.03
In accordance with Chapter 19 of the ASX Listing Rules, net tangible assets per share
represents the total assets less intangible assets, less liabilities ranking ahead of, or equally
with, ordinary share capital and divided by the number of ordinary shares on issue at the end
of the year.
OZ Minerals Limited | ABN: 40 005 482 824 | 2 Hamra Drive, Adelaide Airport, South Australia 5950
T: +61 8 8229 6600 | F: +61 8 8229 6601 | info@ozminerals.com | www.ozminerals.com
A modern mining company
Dividends
Since the end of the financial year, on 18 February 2020 the Board of Directors resolved to
pay a fully-franked dividend of 15 cents per share. The record date for entitlement to this
dividend is 12 March 2020. The financial impact of the dividend amounting to $48.6 million
has not been recognised in the Consolidated Financial Statements for the year ended
31 December 2019 and will be recognised in subsequent consolidated financial statements.
Dividends announced or paid since 1 January 2018
Record date
Payment date
Fully franked cents per
share
Total dividends
$m
12 March 2020
26 March 2020
3 September 2019
17 September 2019
12 March 2019
26 March 2019
3 September 2018
17 September 2018
12 March 2018
26 March 2018
15
8
15
8
14
48.6
25.9
48.4
25.8
41.8
Independent auditor’s report
The above announcement of the results to the market is based upon the Consolidated
Financial Statements and we have included the Independent Auditor’s Report to OZ Minerals
Limited members in the OZ Minerals’ 2019 Annual and Sustainability Report.
OZ Minerals Limited | ABN: 40 005 482 824 | 2 Hamra Drive, Adelaide Airport, South Australia 5950
T: +61 8 8229 6600 | F: +61 8 8229 6601 | info@ozminerals.com | www.ozminerals.com
OZMINERALS.COM
A MODERN MINING COMPANY
2019
Annual and
Sustainability
Report
FRONT COVER & INSIDE COVER:
NEW CARRAPATEENA MINE
Cautionary statement
This report contains forward-looking
statements that relate to our activities, plans
and objectives. Actual results may significantly
differ from these statements, depending on
a variety of factors. The term ‘material topic’
is used for voluntary sustainability reporting
to describe topics that could affect our
sustainability performance. By their nature,
forward-looking statements involve risk and
uncertainty because they relate to events and
circumstances that will occur in the future
and may be outside OZ Minerals’ control.
Given these risks and uncertainties, undue
reliance should not be placed on forward
looking statements.
01
Contents
2019 Snapshot
Message from the Chairman and CEO
Operating Review
Company Strategy
Prominent Hill
Carrapateena
Musgrave
Carajás
Gurupi
Exploration and Growth
Governance
Directors’ Report
Financial Review
Remuneration Overview and Report
Sustainability Report
Mineral Resources and Ore Reserves
Financial Report
Shareholder Information
02
04
06
06
08
10
13
14
16
17
19
23
33
49
70
105
111
158
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 02
2019 SNAPSHOT
US$/lb
A$/lb
Copper Pricing
$/lb
4.5
3.5
2.5
1.5
Jan 15
Jan 16
Jan 17
Jan 18
Jan 19
Jan 20
US$/oz
A$/oz
Gold Pricing
$/oz
2,400
2,000
1,600
1,200
800
Jan 15
Jan 16
Jan 17
Jan 18
Jan 19
Jan 20
Full year Financial Results Summary
Group revenue
EBITDA
Net depreciation
EBIT
Net finance income (expense)
Income tax (expense)
Underlying NPAT
Non-underlying expenses
NPAT
Dividends per share (cents)
2019
$m
1,107.0
462.4
(228.9)
233.5
(4.9)
(64.7)
163.9
0.0
163.9
23
2018
$m
1,117.0
540.4
(228.5)
311.9
6.9
(90.5)
228.3
(5.9)
222.4
23
t
o
h
s
p
a
n
S
9
1
0
2
OZ MINERALS
03
Tonnes of copper produced:
Ounces of gold produced:
109,289
128,874
All Assets
Lannavaara and Painirova, Sweden
Oaxaca, Mexico
Paraiso, Peru
Operating mine
Study phase
Exploration
Gurupi Province
Carajás Province
Yarrie
Musgrave Province
Nullarbor
Coompana
Eloise
Lawn Hill
Gulf
Three Ways
Mount Skipper
Jericho
Prominent Hill
Carrapateena
Maslins
Prominent Hill
/ Underground operations
/ Copper concentrate
(containing gold and silver)
Carrapateena
Gurupi Province
/ CentroGold project to
become Gurupi Hub
Coompana
/ With Mithril
/ First saleable concentrate
Resources Limited
in December 2019
/ Copper concentrate
(containing gold and silver)
/ Targeting copper/nickel
magmatic sulphide
mineralisation
Lannavaara
Oaxaca
/ With private explorer
Mineral Prospektering
i Sverige in the Norrbotten
district of northern Sweden
/ With Acapulco Gold Corp
/ Targeting copper/zinc VHMS
systems in southern Mexico
/ Exited JV in Q4 2019
Maslins
Painirova
/ IOCG exploration project
/ With Mineral
with Investigator Resources
Limited in SA
Prospektering i Sverige
in northern Sweden
Carajás Province
/ Antas operation to
become Carajás Hub
/ Pedra Branca underground
mine in construction
Musgrave Province
/ West Musgrave with
Cassini Resources Limited
/ Pre-feasibility study
completed Q1 2020
Eloise
/ Exploration joint venture
with Minotaur Exploration
in QLD
Jericho
/ Exploration joint venture
with Minotaur Exploration
in QLD
Paraiso
/ With Peruvian company
Inversiones Mineras
La Chalina S.A.C.
/ Targeting IOCG deposits
in the Arequipa district of
southern coastal Peru
Red Metal multi-site
exploration alliance
/ Yarrie for copper–gold in
WA
/ Nullarbor for copper–gold
and copper–nickel in WA
/ Gulf for copper–gold in QLD
/ Lawn Hill for zinc–lead–
silver in QLD
/ Three Ways for zinc–lead–
silver in QLD
/ Mount Skipper for zinc–
lead–silver–copper in QLD
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT
04
MESSAGE FROM THE CHAIRMAN & CEO
Message
from the
Chairman
and CEO
2019 Financial and
Operational Highlights
$1,107.0 million revenue
$163.9 million statutory
net profit after tax
$134.0 million cash balance
with no debt
50.7 cents earnings per share
Total dividends for 2019:
23 per share fully franked
Fifth successive year copper
production and cost guidance
met at Prominent Hill
Carrapateena produced first
saleable concentrate
Brazilian asset strategy developed
for Carajás and Gurupi
Further exploration earn-ins
in Australia, Brazil, Peru and Sweden
Dear shareholders,
We are pleased to present OZ Minerals’
Annual and Sustainability Report for 2019.
As with previous years, we have provided an
overview of our financial and non-financial
performance to holistically look at value creation
for our stakeholders – employees, communities,
governments, shareholders and suppliers –
over the past year and looking ahead to 2020.
This report will provide insight into our strategy,
governance, performance and prospects, as we
move from being a single mine, Australian-based
business, to a global Modern Mining Company
with three operating assets and a strong pipeline
of growth options.
Going beyond what’s possible
to make lives better
Over the past three years we have progressed
our growth strategy, more than doubling the
number of operating mines, our share price and
our workforce. During this period many people,
including Board members and employees, joined
OZ Minerals because they identified with our
culture, how we do things and what we stand for.
With this insight into what makes OZ Minerals
distinctive, we jointly created our Purpose –
Going beyond what’s possible to make lives
better.
More than a tagline, it shows how we intend
to evolve, transform and be a part of something
greater than ourselves. It brings meaning and
direction to our work, as we use it to test
ourselves at every level of what we do.
We continued to strengthen our business focus
through refining our strategy and developing
a framework to show how various parts of
OZ Minerals fit together. The framework includes
our Purpose, our desire to be a Modern Mining
Company and our Strategy to create value for
our five stakeholder groups and is known as
The OZWay (page 6).
Safety at OZ Minerals
As our business continues to grow, safety
remains our priority at OZ Minerals and is an
integral part of everything we do. Our overall
total recordable injury frequency rate (TRIFR)
was 6.27 compared to 7.52 in 2018. The 2019
TRIFR of 6.27 includes unaudited figures from
Brazil. Excluding Brazil, the TRIFR rate for 2019
was 7.52.
During the year, we were saddened and
confronted by a fatal incident involving an
ElectraNet sub-contractor, who was a helicopter
pilot working on stringing the power line to
our Carrapateena project. His death has had
a profound effect on the whole Company,
especially the Carrapateena team.
Building a strong foundation
for future growth
Our devolved organisational structure
has enabled:
/ continued focus on sustained reliable
performance at the Prominent Hill mine,
which has ongoing life extensions anticipated
and a significant existing resource to support
expansion studies
/ construction of the Carrapateena mine, with a
shorter, 12-month ramp up to full production
rates now being targeted following first
concentrate production in December 2019
/ development of the Carajás Hub strategy
in Brazil with construction having started
in December 2019 on the Pedra Branca
underground mine which will become the
first spoke in the Carajás Hub
/ development of a series of strategic
agreements with Vale to advance our low
risk, modest capital Carajás Hub strategy
/ the consolidation of and embedding of
our culture and governance processes.
We furthered the breadth and depth of
experience of the Board as we welcomed
Richard Seville as a new Non-executive Director.
Richard’s suite of skills includes extensive mining
experience, much of it in South America, as
well as executive management experience and
entrepreneurial and commercial skills.
We also appointed an in-country Advisory
Board in Brazil, comprised of several high calibre
Brazilian leaders from various sectors to provide
additional strategic depth as we implement a
low risk, modest capital, hub strategy in the
Carajás and Gurupi Provinces.
Partnering for innovation and agility
As a Lean organisation we believe Partnering
will help us achieve transformative change.
Over the last year we have taken the first steps
towards building true partnerships. Some of
these partnerships were unique, because of
who we partnered with.
The Explorer Challenge in
partnership with Unearthed
Working with Unearthed, an energy and
resources open innovation platform, to find
new approaches and ways of working to drive
up the discovery rate of economic mineral
deposits, and speed up the exploration lifecycle
for a more sustainable and efficient future for
mineral exploration.
OZ MINERALS 05
OZ Minerals Stakeholder Day
A joint OZ Minerals Stakeholder Day
brought together a cross section of people
from very different backgrounds, but
with a shared interest in working with
OZ Minerals to showcase, learn and
reflect on ways to create shared value.
Strategic agreements with Vale
Working with Vale, Brazil’s largest miner
and Carajás tenement holder, we have
put in place a series of agreements to
advance our low risk, modest capital
Carajás Hub strategy in Brazil. This series
of interlinked strategic agreements with
Vale will simplify activities and enable
OZ Minerals to draw on Vale’s extensive
transport and logistics network, utilise
their processing facilities and access small
to medium high-grade Vale exploration
projects in the Carajás region.
A multi-site exploration
alliance with Red Metal Limited
OZ Minerals entered an exploration alliance
with Red Metal Limited, a junior explorer,
which has increased our exploration
footprint in Australia. The alliance gives us a
two-year option to fund a series of mutually
agreed, proof-of-concept work programs on
six of Red Metal’s early-stage projects.
Responsible and
sustainable investment
Awareness and action on climate-related
opportunities and threats are increasing
rapidly in the resources sector and more
broadly.
With a view to creating more sustainable
operations, we have developed a roadmap
to manage climate-related opportunities
and threats based on the Task Force on
Climate-related Financial Disclosures (TCFD),
the market-endorsed, internationally
recognised framework for disclosure.
Actions outlined in our roadmap are
intended to embed climate-related risk
within The OZWay and progressively expand
our performance and overall approach,
creating value for all stakeholders.
A robust balance sheet supported by
strong financial results enabled continuing
investment into growth activities,
$74.3 million in dividends to shareholders
and a cash balance of $134.0 million. The
Board has declared a total, fully-franked
dividend for 2019 of 23 cents per share,
made up of a half year payment of 8 cents
per share and an end-year payment of
15 cents. 2019 earnings per share
totalled 50.7 cents.
We are optimistic about what can be
achieved together with our employees,
communities, governments, shareholders
and suppliers in the coming year.
Our achievements of today and tomorrow
are built on your support and we are
honoured to lead OZ Minerals, a Modern
Mining Company.
Rebecca McGrath
Chairman
Adelaide
18 February 2020
Andrew Cole
Managing Director and CEO
Adelaide
18 February 2020
2020 Priorities
Global growth in 2019 recorded its
weakest pace since the global financial
crisis a decade ago, as rising trade barriers
and the associated uncertainty weighed
on business sentiment and investment
activity. Despite this, the long-term
outlook for copper remains attractive due
to its importance in enabling economic
development and emerging technologies.
Building on the momentum of this outlook,
OZ Minerals delivered on our Strategy in
the past year and achieved an upward
growth trajectory.
We are now at a point where our efforts in
2020 will be focused on consolidating and
strengthening our current position. This will
support the delivery of our future growth
ambitions in the coming years. We will do
this by:
/ strengthening our approach to safe
work in all our operations
/ progressing the implementation of
our TCFD Roadmap
/ delivering reliable and consistent
asset performance
/ ramping up towards full production
at Carrapateena
/ optimising our future growth pipeline
through our province approach,
expansion studies at Prominent Hill and
Carrapateena, and exploration joint
ventures
/ fostering innovation and collaboration
through strategic partnering
06
STRATEGY – THE OZWAY
STRATEGY – THE OZWAY
Strategy –
The OZWay
We are a Modern Mining Company that has grown over the past
three years. To ensure all the people we interact with understand
us, we have developed The OZWay – a simple model that explains
how all the parts of OZ Minerals fit together. At the centre is our
Strategy and wrapping it together is our Purpose – Going beyond
what’s possible to make lives better.
Here is an explanation of each of the elements in The OZWay.
Our Context is what happens in the world
around us. As a Modern Mining Company, with
a focus on Global Copper, we are agile to the
changes in our Macro Environment and we listen
and act on our Stakeholder Expectations. As a
listed company we have a Constitution and we
intend to always meet or exceed the Laws and
Regulations in the places we work.
Our Choices define who we want to be. Our
“how” focussed Strategy guides our priorities
and together we agree on the Risk Appetite that
we work within. Everything we do is about value
creation and our Policies talk about how we
do that in the different cultures and conditions
where we work. Our Code of Conduct provides
for a culture of inclusion where motivated
people act ethically and responsibly. Our
behaviours and principles are lived through
our How We Work Together principles.
Our Enablers bring our Strategy to life
and empower our people to succeed.
Our Organisational Model is devolved to
Corporate Functions and Assets whose leader’s
accountabilities are outlined in our Global
Process Standards and Specifications. The
devolved organisation is connected through
risk management and our Global Performance
Standards set the minimum requirements for
managing material threats. We are proud of
our culture and see this as our most significant
enabler for success.
Our Work is done by our Corporate Functions
and Assets. It is prioritised using Risks in the
context of both threats and opportunities.
We are innovative in the development of our
Business Plans and we use Value Creation
to ensure we invest responsibly. As a Lean
organisation we know when Partnering makes
sense and we ensure the Capability of our
people, processes and technologies allows
us to deliver. We regularly set and track our
Goals aligned to our effective planning.
Our Performance gives us the drive to continue
to grow. We measure our Compliance to ensure
we are doing what we say we will do. Our
internal and external Reporting is data driven,
and outcome focussed with the right people
having the right information at the right time.
We act with integrity and our Engagement
with our stakeholders ensures we continue to
deliver Value Creation. Our Assurance processes
are there to make sure The OZWay is always
followed and continuously improved.
Value Creation for Employees, Communities,
Governments, Suppliers and Shareholders is core
to who we are as a Company. We are collectively
the people who make up OZ Minerals and How
We Work Together will ensure we are Going
Beyond What’s Possible to Make Lives Better.
OZ MINERALS 07
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT
08
OPERATING REVIEW
Prominent Hill
Prominent Hill is a copper–gold–silver mine
located in South Australia, 130 km south-east
of Coober Pedy.
Prominent Hill continues to deliver consistent
and reliable results, meeting copper production
and cost guidance for the fifth successive year.
Prominent Hill generated $440.3 million in
free cashflow which helps us to develop our
asset base and realise our growth aspirations.
Prominent Hill’s mine life was extended to 2031
with a 7% increase in Proved underground
Ore Reserves(a). Mine expansion options are
also being reviewed to assess opportunities
to further extend the mine’s life.
Highlights for 2019
/ Continued to ramp up underground mine
production to 4.0Mt, with plant feed being
supplemented with existing surface copper
and gold stockpiled ores.
/ Successful gold ore processing trials
are expected to result in gold recovery
rates increasing to approximately 77%
from 71% for the 2020 calendar year(b).
/
Improved our workforce diversity with
an increase in Aboriginal participation.
/ Successfully completion of a scheduled
site evacuation for four days when the
Department of Defence conducted testing
in the Woomera Prohibited Area.
/ A new 270 km transmission line currently
being built as a part of OZ Minerals'
South Australian power strategy, to meet
operational requirements and enable our
growth strategy for the region, and final
tie-in is scheduled for 2020.
/ Completed phase one of the underground
expansion study diamond drilling campaign
and successfully progressed to phase two
with 9.4 km of drilling.
/ Completed a review of the site’s Critical
Risk Management safety framework.
/ Shaft haulage identified as the preferred
method to handle potential production
expansion scenarios in the Malu underground
materials handling study. This work will now
be refined as part of the expansion study.
/ Construction of the Malu Paste Plant began
and structural, mechanical and piping (SMP)
package completed.
/ Over 1,000 competitors entered the Explorer
Challenge competition and drilling began on
identified targets near Prominent Hill mine.
Seven holes were drilled in Q4 2019. More
targets in these and other exploration areas
are scoped to be drilled in 2020.
Safe and reliable operations
An expansion study to increase production
post 2023 and extend the life at Prominent Hill
is underway. The study builds on initial work
conducted in early 2018, which supported
further drilling and a materials handling study to
test critical assumptions, including our geological
interpretation of the area below the current
Malu Life Of Mine area.
Results from phase one of the expansion study
diamond drilling (9.4 km) were encouraging and
supported a second phase of drilling which will
continue throughout 2020. These results, along
with data from our materials handling study,
will be incorporated into the broader expansion
study and will be used to confirm the overall best
value option as the basis for mine expansion and
life extension.
This study will continue throughout 2020,
as we continue to define the resource and
evaluate the various expansion cases.
A key aspect of the expansion study will be
to consider equipment powered by diesel
alternatives and the opportunities enabled by
automation to improve productivity and health
and safety outcomes. A clear view on the
potential underground expansion is expected
in late 2020.
The processing of the regular grade gold
stockpiles has been brought forward to the
start of 2020 in place of the low grade copper
stockpile after our gold ore processing trial this
year demonstrated improved gold recovery.
Data from the gold ore processing trial has
also been used to develop metallurgical models
that are now included in the 2020 business
planning cycle.
We successfully completed a scheduled plant
shutdown and site evacuation for four days
when the Department of Defence conducted
testing on the Woomera Prohibited Area. The
closure enabled us to test our flexible work
approach and gave us the opportunity to trial
a temporary remote operating centre from our
Adelaide office, which proved very successful.
As a result, it will become a more permanent
facility going forward.
The total recordable injury frequency rate
for Prominent Hill in 2019 was 8.45, which
was higher than the previous year. This was
due to an increase in the number of recordable
injuries of low severity resulting from more
project work on site.
Prominent Hill
produced 102,479
tonnes of copper and
122,703 ounces of
gold in 2019 at a
lowest quartile C1
cost of 55.8 cents
per pound.
(a) Further details are contained in the
announcement entitled “Significant growth
in Carrapateena Resources; Prominent Hill
mine life extended to 2031“which was
released to the market on 12 November
2019 and is available to view at
ozminerals.com/media/asx
(b) Further details are contained in the
announcement entitled "Third Quarter
Report 2019 for the three months ending
30 September 2019" which was released
to the market on 16 October 2019 and
is available to view at
ozminerals.com/media/asx
(c) Please refer to Mineral Resources and
Ore Reserves section (page 105) for
full disclosure.
OZ MINERALS Explorer Challenge
The Explorer Challenge brought together more
than 1,000 active competitors from 64 different
countries over three months, all competing
for a million dollar prize pool. Entrants were
challenged to turn previously unreleased
Prominent Hill data into new knowledge to help
us find new and innovative ways to interrogate
the data we collect and identify new targets to
test with drilling programs.
The competition brought together a diverse
range of participants from inside and outside
the extraction industries, who helped us gain
different perspectives on our multi-layered
data sets.
The winning entry from Team Guru employed
interpretable machine learning models for
mineral exploration using geochemistry,
geophysics and surface geology.
Six targets were identified in the competition
and drilling began in late October. In addition
to direct target generation, the techniques and
methodologies employed in the competition
have been considered for application in other
projects across the OZ Minerals portfolio.
The Explorer Challenge won the South
Australian 2019 Premier’s Awards for
Innovation: Productivity Improvement, which
recognises excellence in the development or
implementation of innovative programs or
projects in the Resources sector.
Our focus in 2020 is to:
/ embed our refreshed Critical Risk
Management safety program
/ maintain strong operating discipline to
reliably deliver results in the bottom half
of the cost curve
/ continue to extend mine life year on year
/
increase the skill, diversity, and agility of our
mine-site workforce by finding new ways
to connect people to our Company, such as
through the activities-based Team Tasker app
/ complete the Prominent Hill expansion study
/ commission the Malu Paste Plant and fans
/ complete the construction and tie-in of our
new transmission line
/ continue to invest in upgrading the site’s data
processing and remote operating capability
/ further drilling of targets identified in the
Explorer Challenge.
09
Working with our community
The Prominent Hill team and the
Antakirinja Matu-Yankunytjatjara
people, through their business entity
AMY Nominees, were jointly nominated
in the 2019 Aboriginal Enterprises in
Mining Energy and Exploration (AEMEE)
Awards as a finalist for the Resource
Sector Collaboration Award. This
nomination recognises OZ Minerals’
commitment to improving business
outcomes for Traditional Owners and
working together for shared success.
During the year, we increased
engagement at the Coober Pedy Area
School, with a school excursion held at
the mine site and an exciting new VET
pathways program being designed in
collaboration with Career Employment
Group, Port Augusta Secondary
School and the Antakirinja Matu-
Yankunytjatjara people.
We also evolved our relationship with
local pastoralists. Informal sessions were
hosted at the site in training and lunch-
and-learn seminars, and a Christmas in
July event was attended by the Chief
Executive Officer and Site Management
Team. These activities along with a
broad range of site employees attending
station events saw vital relationships
further enriched during the year.
Overview
Location: 650 km north-west
of Adelaide, 130 km south-east
of Coober Pedy
Product: Copper concentrate
(containing gold and silver)
Mining method: Underground mine,
supplemented by open pit stockpile
Processing method: Conventional
crushing, grinding and flotation
Mineral Resources: 140Mt at 1.0%
copper, 0.7g/t gold, and 3g/t silver(c)
Underground Ore Reserves:
39Mt at 1.3% copper, 0.6g/t gold
and 3g/t silver(c)
Surface Stocks Ore Reserves:
23Mt at 0.3% copper, 0.6g/t gold
and 2g/t silver(c)
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 10
OPERATING REVIEW
Carrapateena is an
underground sub-
level cave operation,
with an estimated
mine life of 20 years
currently ramping up
to 4.25 Mtpa.
Carrapateena
is located in a
region highly
prospective for
additional resources,
with known
mineralisation
at Khamsin and
Fremantle Doctor.
Overview
Location: 250 km south-east of
Prominent Hill and 160 km north
of the regional centre of Port
Augusta in South Australia
Product: Copper concentrate
(containing gold and silver)
Status: First saleable concentrate
produced in December 2019,
ramping up to steady state
production
Resources: 965Mt at 0.54% copper,
0.24 g/t gold and 2.7 g/t silver(a)
Reserves: 91Mt at 1.6% copper,
0.67 g/t gold and 7.6 g/t silver(a)
Expansion studies: Estimated
increase to average life of mine
copper production from 65,000 tpa
to ~105,000–125,000 tpa from
2026 with reduced life of mine
all-in sustaining costs.
(a) Please refer to Mineral Resources and
Ore Reserves section (page 105) for
full disclosure.
OZ MINERALS 11
Carrapateena
Carrapateena is an iron-oxide–copper–gold
(IOCG) underground mine located in the highly
prospective Gawler Craton in South Australia
approximately 250 km from the Prominent Hill
mine. Carrapateena produced first concentrate
in December 2019 following a three-year
construction period and is targeting a 12 month
ramp up period to achieve its full production
rate of 4.25 Mtpa, provided the cave propagates
as expected. It is an underground sub-level
cave operation with an estimated mine life of
20 years. A feasibility study is underway into
the future expansion of the bottom half of the
operation into a block cave.
Highlights for 2019
/ First saleable concentrate produced in
December 2019, with 295,000 tonnes of
development ore stockpiled on the surface
at the end of the year.
/ Total development reached 21,922 metres
(4,900 metres for the Tjati decline) with a
vertical depth of 702 metres.
/ The site was connected to the grid power
network by a dedicated transmission line.
The minerals processing plant produced
first saleable concentrate in December.
/ A seismic monitoring system was installed
and commissioned.
/ The 550 person Tjungu accommodation
village was completed.
/ A 1,600 metres sealed aerodrome
commissioned in 2018 continued safe
operation with a 98% on time flight
performance.
/ The operation’s workforce was recruited on
time and under budget with 87% of recruited
employees residing in South Australia.
/ Tailings storage facility completed on schedule.
/ Plans are underway to expand the
Carrapateena operations, with the
Carrapateena block cave expansion study in
pre-feasibility stage and the Carrapateena life
of province plan in scoping study, furthering
our provincial approach to mine development.
/ Stage 1 of the northern well field was
commissioned and is supplying water to site.
/ All ventilation fans were commissioned.
/
Improvements were made to the southern
access road in consultation with stakeholders
to accommodate oversize and over mass
vehicles entering site.
/ Over 600 people have worked on site, with
20% linked to the Upper Spencer Gulf.
Safety focus
Throughout the year, 24 new Carrapateena
Emergency Response Team (ERT) members
completed specialist training in Underground
Emergency Response. The ‘Bring It Home’
safety initiative was launched to further embed
behavioural safety practices as the site was
completing surface construction activity and
continuing to stockpile underground ore.
The total recordable injury frequency rate
for 2019 has reduced to 7.24 down from
7.52 during 2018. An increase in lower
consequence injuries was also recorded at
Carrapateena and a review of current site task-
based behaviour programs has commenced.
During the year, there was a fatal incident
involving an ElectraNet sub-contractor, who was
a helicopter pilot working on stringing the power
line to the Carrapateena project. The incident
had a profound effect on the whole Company,
especially the Carrapateena team.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 12
OPERATING REVIEW
Working with our community – Carrapateena
A focus of Carrapateena has been stakeholder engagement and involvement. Throughout 2019,
we continued to create value for our stakeholders by:
/ ensuring a ‘South Australia first’ recruitment strategy – over 80% of our Operations’
workforce live in South Australia with numerous employees relocating to South Australia
to take up employment at Carrapateena; 20% of the Operations workforce reside in the
Upper Spencer Gulf
/ hosting local leaders, including the Mayors and CEOs of the three Upper Spencer Gulf cities
for a site visit to observe construction progress and discuss opportunities for further regional
value creation
/ working closely with our pastoral stakeholders seeking innovative ways to create value,
such as the supply of treated water for stock watering in a period of drought
/ supporting our Traditional Owners, the Kokatha People, to seek employment and business
opportunities with the operation
/ directly engaging local pastoralist and Kokatha businesses, including in dust suppression,
road maintenance, laboratory courier services, fence construction and other construction
related activities
/ hosting a Kokatha specific processing training program in partnership with TafeSA,
the Kokatha Aboriginal Corporation and other groups
/ supporting entry level employment programs with our site services partner, ISS
/ supporting various local community events and initiatives including the first multi-trade
program with other major employers in the region, hosted in Port Pirie
/ seeking apprentices from the Upper Spencer Gulf
/ engaging multiple local suppliers in contracting opportunities both directly and through
our contracting partners, with a total value of more than $7.2 million awarded.
The Carrapateena team participated in the Port Pirie Jobs Fair and ran the first OZ Minerals
Career Hub, an innovative way of streamlining the interview and recruitment process to make
it more accessible for regional applicants.
The team also finalised a cross-asset graduate program for its 2020 intake, with participants
now able to gain experience at Carrapateena and Prominent Hill. The Regional Training
Community of Practice also met for the first time with local registered training organisations,
further building positive relationships with local Upper Spencer Gulf businesses.
Our focus in 2020 is to:
/ advance psychologically safe work culture
/ safely ramp up to full production target
of 4.25Mtpa by end 2020
/ progress the Carrapateena expansion
study, including fundamental caving
and infrastructure studies
/
investigate additional technological
opportunities such as mine to mill digitisation
/ trial a 250 kW hybrid energy solution facility
to develop renewable energy solutions and
demand management opportunities. This is
part of the Energy and Mining Collaboration,
an initiative by OZ Minerals in collaboration
with Adelaide University, CSIRO, the
Department of Energy and Mining, the Rocky
Mountain Institute, SunSHIFT and the Tonsley
Innovation Precinct
(b) Further details are contained in the
announcement entitled “Carrapateena
Block Cave Expansion has potential to
optimise value and further unlock the
province” which was released to the market
on 6 March 2019 and is available to view
at ozminerals.com/media/asx.
/ continue to explore province expansion and
future life extension options through drilling
at Khamsin, Fremantle Doctor, the Saddle
and Carrapateena
/ optimise our workforce composition with an
emphasis on diversity and workforce flexibility
/ continue to focus on providing local supply
opportunities
/ maintain stakeholder relationships and
continuously consider stakeholder value
creation initiatives.
Carrapateena mine and
province expansion
The Block Cave Expansion Scoping Study
was completed in 2019 and determined that
replacing the lower half of the sub-level cave
with a block cave and expanding the annual
throughput rate from 4.25Mtpa to 10–12Mtpa
from 2026 could create significantly more value
than a sub-level cave development alone.
The study outlined the potential to increase
average life of mine copper production from
65,000 tpa to ~105,000–125,000 tpa from 2026
and reduce life of mine all-in sustaining costs.(b)
The project has now moved to the pre-feasibility
stage, which is expected to be completed by
mid-2020. Diamond drilling has begun to help
improve our understanding of the geotechnical
aspects and resources of the sub-level cave and
potential block cave areas to support ongoing
expansion studies.
A drilling program has also commenced to help
us understand the full potential of the wider
Carrapateena province, including drilling sites
at Khamsin, Fremantle Doctor, the Saddle and
Carrapateena itself.
The drill program at the Punt Hill joint venture
with Red Metal Limited was completed during
the year with six holes drilled. We exited this
earn-in agreement in Q4 2019.
OZ Minerals has also entered into a new
exploration earn-in agreement to explore for
IOCG style resources with Investigator Resources
Limited (ASX:IVR) at the Maslins prospect,
located on the Stuart Shelf approximately
55 km south of Carrapateena. Field work has
commenced and is focused on the Maslins
geophysical anomaly, involving infill gravity
and magneto-telluric (MT) surveys. Detailed
interpretation and modelling of the data
is underway, and drilling is expected to
commence in Q1 2020.
OZ MINERALS 13
Musgrave
The Musgrave area
is an exciting new
mineral province
with attractive near-
mine and district
opportunities.
The Musgrave province is a highly prospective
region spanning Western Australia and South
Australia. The West Musgrave project is a joint
venture with Cassini Resources (ASX:CZI), with
the pre-feasibility study recently completed
along with the announcement of a maiden
Ore Reserve estimate. Full details are available
at ozminerals.com/media/asx.
West Musgrave overview
Location: Western Australia
near the South Australia and
Northern Territory border
Earn-in agreement: Cassini
Resources 30% ownership;
OZ Minerals 70% ownership
Deposit: Copper and Nickel
Status: Pre-feasibility study stage
Province exploration program:
One Tree Hill prospect and the
Succoth deposit
West Musgrave project
The West Musgrave project is located in
Western Australia, near the South Australia
and Northern Territory borders. West
Musgrave contains three known deposits –
Nebo, Babel and Succoth – as well as the
One Tree Hill prospect. The Nebo and Babel
copper-nickel deposits are the current focus
of drilling and studies.
We have now reached 70% ownership of
the West Musgrave project and our confidence
in the Nebo-Babel deposits has improved as
infill drilling has enabled the conversion of
Inferred Resources to the higher confidence
Indicated category.
The pre-feasibility study timeline was extended
in 2019 so we could complete a detailed
evaluation of additional value-add opportunities.
The most significant, the use of a dry vertical
roller mill to reduce power consumption,
has been complemented by reducing the
onsite workforce through remote operations,
optimising power supply and demand, and
using alternative processing technologies.
In parallel with the pre-feasibility study,
OZ Minerals has developed stronger
relationships with the local community and
progressed baseline environmental studies
with a view to submitting regulatory approvals
documentation in 2020. Discussions with the
Traditional Owners are ongoing, with a view
to developing a Mining Access agreement.
2019 highlights
/ Ran a successful collaboration Hub with
150 members of the local community in
Jameson, receiving feedback on the concerns
and aspirations of the Traditional Owners.
/ Collaboration Hub ran with 10 Western
Australian Government departments that
identified opportunities to work together
to add value.
/ Completed a mining study that examined
a wide range of scenarios to arrive at an
optimised project configuration.
/ Metallurgical testing confirmed recovery
and concentrate quality targets for all types
of ore present in the deposit.
/ Base case power reduced from 65 MW to
55 MW by developing a new flowsheet and
adopting the vertical roller mill technology
over a traditional Semi-Autogenous-Grinding
Mill and Ball Mill circuit.
/ Established the feasibility of powering the
project using a low emission diesel–solar–
wind-battery solution with 70–80%
renewable penetration.
/ Confirmed that an off-site, integrated
operations centre will reduce the workforce
required on site and provide more flexible
working arrangements for our people.
/ Progressed planning for the mine access
agreement and regulatory approvals.
/ Cassini Resources completed an aeromagnetic
survey (3,978 line km) at the One Tree Hill
prospect and a further four holes were
drilled (1,486 metres).
/ Completed infill drilling (two holes,
852.9 metres) on one Succoth prospect section
to confirm our geological interpretation.
Working with the community
The team worked with the local community to
co-design elements of the West Musgrave project
and maximise community value where possible.
More than 150 community members attended a
Community Consultation Hub in Jameson to learn
more about the project and discuss their aspirations.
A Western Australian Government Hub process was
created to introduce OZ Minerals, Cassini Resources
and the project to different branches of government.
Attendees from more than ten departments joined us
to explore opportunities to work together and add value
to the project, particularly from a community point of
view. The project team also volunteered at the Desert
Dust Up event in Warburton with school children from
the local Ngaanyatjarraku Shire.
Our focus for 2020 is to:
/ commence development of a mine access
agreement with the Traditional Owners
/ Planned infill drilling at Nebo and Babel
completed and rigs demobilised from site.
/ submit approvals documentation to
the Western Australian regulator.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 14
OPERATING REVIEW
Carajás
The Carajás in Brazil is one of the world’s
premier IOCG mineral provinces and is host to
the world’s largest iron ore mine and a number
of sizeable copper–gold mines. OZ Minerals has
the operating open pit mine at Antas, the Pedra
Branca underground project under construction,
as well as the high grade copper–gold
exploration projects Pantera and Clovis.
OZ Minerals has also entered into earn-in
agreements with Vale S.A. for options to
purchase two nearby exploration projects;
Santa Lucia, an advanced exploration project
approximately 40 km trucking distance from
Antas, and the less advanced but highly
prospective Circular North.
We are implementing a staged, low risk and
capital conservative Hub strategy in the province
that will see copper processing facilities serving
multiple small and mid-sized mines in the
region. The first Carajás Hub will be the
Antas facility which will process ore trucked
from the ~1Mtpa Pedra Branca underground
mine, located 75 km from the Antas plant.
Construction began on the Pedra Branca mine
in December 2019 with first development ore
expected to be reached in mid-2020.
The Antas mine produced 6,810 tonnes of
copper and 6,171 ounces of gold in 2019.
Mining studies have been developed with
a focus on pit wall steepening to extend
the life of the mine until mid-2021.
Antas Overview
Location: Carajás province in the
state of Pará in northern Brazil,
~40 km south-east of Parauapebas
Product: Copper concentrate
(containing gold)
Mining method: Open pit,
drill and blast
Processing method: Ore sorting,
conventional crushing, grinding,
flotation and filtration
Mineral Resources: 2.6Mt at
1.2% copper, 0.4 g/t gold(a)
No Ore Reserve reported in 2019
(a) Please refer to Mineral Resources
and Ore Reserve section (page 105)
for full disclosure.
OZ MINERALS 2019 highlights
/ Carajás TRIFR for 2019 was 1.34 with
OZ Minerals’ reporting governance to be
adopted in 2020.
/ A high calibre advisory board was established
in Brazil complementing the strategic depth
and capability of the local management team.
/ During the year, an updated risk assessment
and incident investigation using the Incident
Cause Analysis Method (ICAM) was introduced
across the Carajás, with assistance from other
OZ Minerals operations. This was combined
with the roll out of OZ Minerals’ governance
standards.
/ Resource extension drilling was completed
focusing in and below the current Antas North
open pit (5,566 metres), resource infill drilling
(1,115 metres) at the satellite Azevedo open
pit and limited near mine exploration adjacent
to the current open pit (1,244 metres).
/ Utilisation of a lower cost wall steepening
approach to access deeper ore. This
contributed to a site all-in sustaining
cost performance of US$2.95 c/lb.
/ Further underground drilling was progressed,
with several drill holes intersecting copper
bearing structures (3,200 metres) at the Clovis
prospect. An exploration target of 2.0-4.0
million tonnes at a grade of 3.1-5.0% copper
was determined. The potential quantity and
grade of the Exploration Target is conceptual
in nature.(a)
/ The Pedra Branca Feasibility Study Update
Report and preliminary mine optimisation
studies were completed, to identify the best
value proposition for mine scale and design.
Construction on the Pedra Branca decline
began in December 2019 and first
development ore is targeted for mid-2020.
/ At the Canaã Block (containing the Pedra
Branca project), exploration work has focused
on regional mapping, sampling and concurrent
ground magnetics and EM on tenements
adjacent to the Pedra Branca mine lease.
Our focus in 2020 is to:
/ safely execute development of Carajás
Hub elements
/ complete implementation of OZ Minerals’
governance standards.
/ continue developing Antas as a processing
hub for the region.
/ maintain processing plant performance and
pit operating efficiencies.
/ strengthen relationships with local community.
/
implement the updated Antas North open pit
design and mine plan.
/ focus on reducing mining costs and increasing
fleet efficiency further.
/
implement ore sorting technology to process
stockpiled mineralised waste to generate
value and gain operational performance
experience to fast tracking implementation
at Pedra Branca.
/ complete construction and operational
ramp up at Pedra Branca.
/ obtain the Pedra Branca installation license
(LI) in H1 2020.
/ continue exploration on tenements
adjacent to the Pedra Branca mine lease
in the Canaã Block.
15
Pedra Branca Overview
Location: Carajás province.
Northern Brazil, in the state of Pará,
~100 km south of Parauapebas
and 30 km east of Canaã
Project: High grade copper–gold
underground mine
Status: Construction underway
and feasibility study nearing
completion.
Proposed method:
Underground open-stoping
(a) Further details are contained in the
announcement entitled “Carajás Hub
strategy gains pace” which was released
to the market on 28 November 2019
and is available to view at
ozminerals.com/media/asx.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 16
OPERATING REVIEW
Gurupi
The Gurupi province is in the state of Maranhão
in northern Brazil, between the cities of Belém
and São Luis. OZ Minerals' CentroGold project
sits in this province and is considered to be one
of the largest undeveloped gold projects in
Brazil, with three main deposits: Blanket,
Contact and Chega Tudo.
The larger CentroGold area is considered to
host exciting exploration potential. Interpretation
of a vast database of historical information,
including soil geochemistry and drilling also
suggests potential associated with the proximal
Chega Tudo deposit and eight other known
targets including Mandiocal, Sequeiro and
Jibóia. The acquisition of the Jibóia exploration
tenements to the north of CentroGold has
expanded the total land package held to
~2,300 km2 along 85 km of strike length,
with the CentroGold project now comprising
less than 3% of this land.
Gurupi’s potential has strengthened with the
CentroGold pre-feasibility study demonstrating a
minimum 10-year operation could be developed
for low capital investment with industry bottom
half operating costs.
CentroGold
Our pre-feasibility study estimates that
CentroGold will have a life of mine average
gold production of 100,000–120,000 oz per
annum, with 190,000–210,000 oz per annum
in the first two years(b). Construction costs are
estimated to be approximately US$155 million
for a project NPV of US$203.2 million, and a life
of mine all-in sustaining cost of US$640/ oz.
/ CentroGold is expected to become a Gurupi
processing hub, servicing nearby deposits
such as Chega Tudo, eleven and a half
kilometres to the west. This year we have
focused on permitting and village relocation
planning, which involves face to face
interviews for a relocation plan applying
international standards. Aerial surveys were
completed for the Cipoeiro township and have
been expanded to the wider mining lease.
lifting the injunction, which was granted in
2013 by a Federal Court judge against the
then tenement holder citing irregularities in
the grant of the environmental licence.
2019 highlights
/ We completed the pre-feasibility study, which
included only the Blanket and Contact deposits
and issued the maiden Ore Reserve estimate.
The potential future addition of the nearby
Chega Tudo deposit, following further studies,
may also add to the project production profile.
/ We progressed the legal process of lifting the
injunction while continuing village relocation
assessments and planning.
/ We developed a low risk, modest capital
hub concept for the Gurupi province.
/ We undertook limited high value resource
infill drilling at the Blanket (4,646.9 metres)
and Contact (6,334.9 metres) deposits.
/ We began regional exploration with drilling
at the Sequeiro and Pica Pau targets in the
southern end of the Gurupi landholding,
with 809 metres of drilling completed at
the Pica Pau target and 1,054 metres of
drilling completed at the Sequeiro target.
/ We purchased the Jibóia tenement which
consolidates the Gurupi greenstone belt,
bringing the province total land package
to 2,300 km2 along 85 km of strike length.
/ Construction of a new base camp at
the Jibóia project continued along with
geological mapping/sampling.
/ Construction of a new metal core shed
for sample storage at Chega Tudo.
Our focus in 2020 is to:
/ progress removal of the injunction
/ continue the approvals process and local
community engagement programs
/ update the Mineral Resource,
Ore Reserve and pre-feasibility study
/ progress to a feasibility study
(contingent on injunction removal)
/ The Feasibility Study and further regional
/ continue regional exploration
exploration are anticipated to begin when
the injunction over the CentroGold project
is removed. A final assessment report by
the local INCRA (the Colonization and Rural
Reform Institute) has been prepared stating
their support. The report is awaiting evaluation
from INCRA in Brasilia. The ANM (National
Mining Agency) has also issued a favourable
report that supports the planned future mining
activity at CentroGold. Both are important
steps in gathering institutional support for
/ validate historic exploration drilling
over CentroGold and Jibóia
/ commence an expanded drilling
program over both the CentroGold
project and ranked exploration targets
(contingent on injunction removal)
/ commence an airborne survey and
drilling programme (1,500 metres)
over the Jibóia Project.
CentroGold overview
Location: Gurupi region, in the
state of Maranhão in northern
Brazil, between the cities of Belém
and São Luis and close to existing
infrastructure including sealed roads,
power, water and skilled labour
Status: Pre-feasibility study complete,
awaiting injunction removal to begin
Feasibility study
Project: Open pit gold project
Proposed method: Open pit mine,
flotation and carbon-in-leach
processing plant
Mineral Resource: 28Mt @
1.9 g/t gold(a)
Estimated mine life:
10 years minimum(b)
Estimated annual production:
100,000–120,000 oz gold(b)
(a) Please refer to Mineral Resources and
Ore Reserves section (page 105) for
full disclosure.
(b) Further details are contained in the
announcement entitled “Gurupi Province
potential strengthened on CentroGold
pre-feasibility study” which was released
to the market on 11 July 2019 and is available
to view at ozminerals.com/media/asx.
OZ MINERALS 17
Exploration and growth
Growth through exploration is a central part of our strategy to
create value. We have built a well-developed growth pipeline
with multiple projects at different stages of maturity. This allows
us to allocate resources to the most value-accretive activities and
gives us more options when deciding which projects to progress.
We rigorously pursue our pipeline of opportunities and if at any
time we determine that a project does not have the potential to
generate substantial value, we cease expenditure and withdraw
from the arrangement in line with our obligation and intent to
invest responsibly.
OZ Minerals has several exploration earn-in agreements in place with highly regarded explorers who
provide us with expertise in specific geologies or locations. Our partners, in turn, access capital to
undertake drilling programs. OZ Minerals typically works with its partners to oversee projects while
they manage on-the-ground-activities.
Our exploration growth pipeline expanded this year with new earn-in agreements in the
Carrapateena province (Investigator Resources Limited) and Sweden (Mineral Prospektering i Sverige),
a new multi-site exploration greenfield discovery alliance (Red Metal Limited) targeting base metals
mineralisation in WA and QLD, and a new joint venture in QLD (Minotaur Exploration). Our earn-in
agreement with Woomera Mining Ltd was terminated, due to licence renewal issues. No field work
was undertaken on our Oaxaca projects in Mexico this year while permitting was pursued, and the
agreement was subsequently exited.
Exploration portfolio
Multi-site exploration alliance
with Red Metal Limited
In January 2019 OZ Minerals entered into an
exploration alliance with Red Metal Limited,
which significantly increased its exploration
footprint in Australia. The alliance gives
OZ Minerals a two-year option to fund a series
of mutually agreed, proof-of-concept work
programs on six of Red Metal’s early-stage
projects, which include:
/ Yarrie for copper–gold in WA
/ Nullarbor for copper–gold and
copper–nickel in WA
/ Gulf for copper–gold in QLD
/ Lawn Hill for zinc–lead–silver in QLD
/ Three Ways for zinc–lead–silver in QLD
/ Mount Skipper for zinc–lead–silver–
copper in QLD
Since January, cultural heritage surveys and
local level agreements have been completed at
Mt Skipper and drilling has begun (single hole,
950.8 metres). No significant mineralisation
was intercepted and follow up geophysical
work (downhole and ground Electro Magnetic
survey work) has been completed. Cultural
heritage surveys and local level agreements
were completed for the Nullarbor project and
an infill gravity survey has identified several
targets where drilling commenced in Q4 2019.
We finalised an extensive magneto-telluric (MT)
survey at the Three Ways project and drilling is
expected to begin at that prospect in Q2 2020.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 18
OPERATING REVIEW
Maslins project, Investigator
Resources Limited
We entered into a new exploration earn-
in agreement to explore for IOCG with
Investigator Resources Limited (ASX:IVR) at the
Maslins prospect, located on the Stuart Shelf
approximately 55 km south of Carrapateena.
Investigator Resources is an ASX-listed Australian
mineral explorer with extensive exploration
experience in the Gawler Craton of South
Australia. Infill gravity and MT surveys were
conducted and detailed interpretation and
modelling is complete with associated drilling
anticipated in Q1 2020.
Eloise joint venture with
Minotaur Exploration
OZ Minerals attained a 70% beneficial interest
in the Eloise joint venture after reaching an
investment of $10 million over three years.
The Cloncurry district contains strong mineral
endowment in a variety of commodities. A
major drill program (80 holes, 21,000 metres)
was undertaken in 2019 to delineate the
central portion of the mineralisation at Jericho
where the best grades and thicknesses have
been intercepted.
Jericho joint venture with
Minotaur Exploration
In a refinement of our relationship with
Minotaur Exploration in the Cloncurry area,
Jericho was excised from the Eloise joint venture
area to create a separate joint venture around
the Jericho discovery. OZ Minerals agreed to
loan carry Minotaur Exploration’s funding
share of Jericho from 1 April 2019 in return
for an 80% beneficial interest in the project.
58 holes have been drilled with the aim of
increasing confidence in the thickness and
grade distribution of the J1 and J2 lodes.
We also significantly increased our footprint in
the Cloncurry District of north west Queensland
through formation of the Cloncurry Regional
Alliance with Minotaur Exploration.
Lannavaara with Mineral
Prospektering i Sverige AB
OZ Minerals has an agreement with private
explorer Mineral Prospektering i Sverige
(MPS) to explore for IOCG mineralisation in
the Norrbotten district of northern Sweden.
OZ Minerals can earn 75% of the project by
spending US$10 million over 66 months and
has the right to purchase a further 25% equity.
Ground based EM and magnetic geophysical
surveys were completed at the Lannavaara
project in northern Sweden in 2019 along
with drilling (8 holes, 1,862.9 metres). Results
confirmed the presence of a low grade,
structurally-controlled pyrrhotite/chalcopyrite
sulphide system as well as lesser skarn
mineralisation. Further ground-based geophysical
surveys and drilling is planned for 2020.
Painirova project with Mineral
Prospektering i Sverige AB
We expanded our partnership with Mineral
Prospektering i Sverige AB by signing a new
earn-in agreement on the Painirova project in
northern Sweden. Painirova is located between
the Mertainen iron-oxide–apatite deposit and
the active Leveäniemi mine at Svappavaara in
Sweden’s most prolific mining belt. We made
an initial commitment to spend US$500,000 on
exploration after which further budget approval
can be sought to continue exploration activities.
An airborne EM and magnetic survey of
1,668 line kilometres was flown, with
preliminary data highlighting several areas
for follow up ground works and drilling.
Paraiso with private Peruvian company
Inversiones Mineras La Chalina S.A.C.
In December 2018, OZ Minerals entered into
an earn-in agreement with Inversiones Mineras
La Chalina S.A.C. to explore for IOCG deposits
in the Arequipa district of southern coastal
Peru. We committed to spend US$500,000
on exploration in the first 12 months, after
which we can elect to proceed with the project.
If we progress, OZ Minerals can earn 100%
of the project by spending US$11.5 million
over five years.
Field work began during the year, with a
successful community engagement process
enabling a three-month geological mapping
and sampling program. The program identified
a number of geochemical anomalies which
required further on-ground assessment and
initial geophysical surveys. We have initiated
the drill permitting process, which is anticipated
to take six to nine months. Drilling is expected
to begin in H2 2020.
OZ MINERALS 19
Governance
Our governance framework, supported by a healthy corporate
culture, helps us to deliver on our strategy and enables us to
control risks and assure compliance
OZ Minerals’
management structure
Our management structure, The OZWay,
Value Creation Policies and Global
Performance and Processes Standards provide
clear accountabilities, lean business processes
and reporting to ensure our activities are
performed in line with our risk appetite and
strategy and are conducted in a financially,
environmentally and socially responsible way.
OZ Minerals’ Board is committed to adopting the
recommended corporate governance practices
set out in the ASX Corporate Governance
Council Principles and Recommendations. We
have reviewed our governance practices against
the fourth edition of the ASX Recommendations
which commenced on 1 January 2020 and we
are pleased to report that our current practices
align with emerging standards.
The Board is responsible for overseeing the
management of the Company. The Board has
adopted a Board Charter that sets out its roles
and responsibilities, which includes setting the
Company’s goals and objectives, reviewing and
monitoring the Company’s material risks and
its system of internal compliance and controls,
setting an appropriate corporate governance
framework, and determining broad policy issues
for the Company. The Board also ensures that
specific powers and responsibilities have been
delegated to the Company’s CEO and that the
overall strategy is aimed at delivering value for
shareholders and other stakeholders.
The Board currently comprises six directors –
one executive director and five non-executive
directors. The executive director is Managing
Director and Chief Executive Officer, Andrew
Cole. The Board has a unitary structure.
All non-executive directors, including the
Chairman, are independent. The proportion
of women on the Board is 33%.
Three standing committees help the Board with
the effective discharge of its responsibilities:
Audit Committee – assists the Board in
relation to financial reporting and disclosure
processes, internal financial controls, funding,
financial risk management, and oversight of the
internal control and risk management system’s
effectiveness.
People & Remuneration Committee – assists
the Board in relation to the remuneration of
directors, executives and employees, succession
planning, the establishment and monitoring
of the Employee Value Creation Policy, and
oversight of risk relating to people performance
management, company culture, succession
planning, capacity and capability, and diversity
and inclusion.
Sustainability Committee – assists the
Board in relation to safety, health, environment
and community (SHE&C) matters including
how the Company is reporting and managing
risks relating to SHE&C and its requirements for
internal notification, investigation, reporting
and continuous improvement.
OZ Minerals’
management team
Management is responsible for implementing
management systems across the business.
They are also responsible for assuring the
application and effectiveness of these systems
through OZ Minerals’ four lines of defence
Audit and Assurance Governance Framework.
Training and competency are part of the
continuous improvement process and are
detailed in the Performance Standards.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT
20
GOVERNANCE
Management structure
Board of Directors(a)
Rebecca McGrath
Chairman and Independent
Non-executive Director
Peter Wasow
Independent
Non-executive Director
Board Committees
Andrew Cole
Managing Director and
Chief Executive Officer
Tonianne Dwyer
Independent
Non-executive Director
Charlie Sartain
Independent
Non-executive Director
Richard Seville(b)
Independent
Non-executive Director
Audit
Committee
People & Remuneration
Committee
Sustainability
Committee
Executive Committee
Andrew Cole
Warrick Ranson
Mark Irwin
Kerrina Chadwick
Fiona Blakely
Managing Director and
Chief Executive Officer
Chief Financial
Officer
Chief Commercial
Officer
Chief Corporate
Affairs Officer
Chief People Officer
Tania Davey
Myles Johnston
Gabrielle Iwanow
Steve McClare(c)
Carlos Gonzalez
Chief Transformation
Officer
General Manager
Carrapateena
General Manager
Prominent Hill
Chief Technical
Officer
Chief Executive
Brazil
Asset managers and line managers
Employees
(a) Marcelo Bastos resigned as a Non-executive
Director effective 5 April 2019.
(b) Richard Seville commenced as a Non-
executive Director on 1 November 2019.
(c) Steve McClare was West Musgrave
Operations GM & Chief Technical Officer
from 13 May 2019 to 12 February 2020.
Steve McClare continues as Chief Technical
Officer from 12 February 2020.
S U P P O RT I N G D O C U M E N T S
/ Corporate Governance Statement
/ Value Creation Policies and supporting
Performance and Process Standards
/ Board and Committee Charters
/ Company Constitution
/ Code of Conduct
ozminerals.com/about/corporate-governance/
OZ MINERALS 21
Governance Framework
Our governance framework has been
designed to enable lean business
processes that drive clear accountabilities
and create room for innovation and
is explained through The OZWay. The
OZWay is a simple model that includes
our purpose, our desire to be a modern
mining company and strategy to create
value for our five stakeholder pillars.
Our Context
As a modern mining company, with a focus
on global copper, we are agile to the changes
in our macro environment and we listen and
act on our stakeholder expectations. All
corporate and asset documents comply with
the laws and regulations of the jurisdiction in
which each asset operates.
Our Choices
We have a global devolved operating model,
ensuring our assets are autonomous and
accountable. We focus on what matters, and
set processes that create value, embrace the
global devolved model and provide clarity for
new assets, partners, suppliers and employees
coming into OZ Minerals.
Our How We Work Together (HWWT) Principles
and underpinning behaviours are embedded
in our everyday activities, core systems and
processes and enable growth, innovation
and collaboration. The HWWT Principles drive
transparency and fair dealing and propagate
a culture of performance and devolved
accountability – this allows us to deliver on
our Strategy.
Our Code of Conduct applies standards for
appropriate ethical and professional behaviour.
It provides guidelines to our employees,
directors, contractors and partners as to our
expectations regarding issues such as conflict
of interest, gifts, entertainment and gratuities,
anti-bribery and corruption, equal opportunity
and speaking up.
OZ Minerals is determined to create shared
value for all our stakeholders, which is at the
heart of our Strategy. We have five Value
Creation Policies which are designed to provide
a clear representation of our intent and make
our intent transparent to our stakeholders to
enable them to hold us to account. Our Value
Creation Policies, along with our Securities
Trading, Continuous Disclosure, Anti-Bribery
& Corruption, Inclusion & Diversity and Speak
Up materials are publicly available.
Our Enablers
Underpinning the Policies are Performance
Standards that enable us to effectively manage
the material threats and opportunities that are
common across OZ Minerals. The Performance
Standards are grouped into four key areas -
safety, environment, health and wellbeing, and
social. They set out the minimum mandatory
control requirements and accountabilities to
manage risks, comply with the law, design
operating systems with devolved accountability
and provide criteria for measuring value
creation performance.
The Performance Standards are used to audit
asset performance and set the standards for
any new assets to achieve. They are provided
to contractors and partners to outline what we
expect when working at an OZ Minerals asset.
These documents are structured so that each
asset, contractor or partner can use or develop
their own business standards and processes to
meet our standards, in keeping with our lean,
global devolved business model.
Our global Process Standards and associated
Specifications enable us to work effectively
within our devolved model by describing the
accountabilities and authorities of the Board,
CEO, Executive Leads and Leads of the Corporate
Functions and Assets relating to key business
processes and management activities. They are
the activities that we undertake that are unique
to us, and the Process Standards are used by our
employees, functions and assets. They define
the inputs and outputs required, the processes
people must follow and the delegations that
they can work within.
Our Performance
Internal and external audits
Risk management, audit and assurance
underpin the Process and Performance
Standards as critical elements of our Audit
and Assurance Governance Framework.
We conduct regular audits to systematically
and objectively verify that we conform with
performance management standards and legal
requirements, and in order to recommend ways
to improve safety, health and wellbeing along
with environmental and social performance.
Further audits are undertaken commensurate
with the assessed risk profile.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 22
GOVERNANCE
Governance framework
Company Constitution / Code of Conduct / Board Charter
Audit Committee
Charter
People & Remuneration
Committee Charter
Sustainability Committee
Charter
Policies and procedures
Value Creation Policies
We are determined to build value for
our stakeholders and creating shared
value is at the heart of our strategy.
Our five Value Creation Policies,
which are outlined below, set out
our overarching intent and enable
our specific stakeholders to hold us
to account.
Employee Value Policy
To ensure we provide a safe work
environment that empowers people
to have a positive impact and an
environment that allows them to grow
and prosper. Our focus is on ensuring
our people enjoy coming to work, are
engaged, valued and inspired to grow
and contribute to OZ Minerals and greater
society through exceptional leadership.
Shareholder Value Policy
To ensure we meet or exceed shareholder
expectations while being recognised as
an ethical, well-governed and socially
responsible company.
Supplier Value Policy
To be aligned with suppliers in a way
that builds trust-based, collaborative
and sustainable relationships and
partnerships focused on the betterment
of both organisations, the industry and
the broader community.
Government Value Policy
To ensure we build trust with various
levels of government through ethical
behaviour, environmental stewardship,
social responsibility, and by creating
sustainable economic value, whilst
maintaining broad political support for
the ongoing development of our portfolio.
Community Value Policy
To ensure we’re aligned with
communities in a way that builds trust-
based, collaborative and sustainable
partnerships focused on the betterment
of OZ Minerals, our host communities
and community members living in
regions in which our sites are located,
the industry and broader society.
Continuous Disclosure
To ensure timely and accurate information
is provided equally to all shareholders
and market participants, consistent
with OZ Minerals’ commitment to its
continuous disclosure obligations.
Securities Trading
To set out the processes of
OZ Minerals for employees (full time, part
time and casual), directors, consultants
and contractors of OZ Minerals trading
in securities of the Company.
Anti-bribery and Corruption
To ensure directors, officers and
employees understand, observe and
comply with anti-bribery and anti-
corruption laws and regulations, and
our How We Work Together principles.
Speak Up
To encourage people to speak up
if they become aware of potential
misconduct and ensure that business is
conducted honestly, with integrity, and
in accordance with our How We Work
Together principles, Code of Conduct
and standards of expected behaviour.
Performance standards
Environment
Safety
Social
Health and Wellbeing
Process standards (including Enterprise Risk Management)
Planning
Compliance
Financial
People
Reference documents
Asset documents
OZ MINERALS Directors’
Report
24
DIRECTORS' REPORT
Directors’ report
The directors present their report for the Consolidated Entity
(OZ Minerals) for the financial year ending 31 December 2019
(‘the year’) together with the Consolidated Financial Statements
for the year. OZ Minerals Limited (OZ Minerals Limited or the
‘Company’) is a Company limited by shares that is incorporated
and domiciled in Australia.
Principal activities
The principal activities of the Consolidated Entity during the year were the mining and processing of
ore containing copper, gold and silver; sales of concentrate; undertaking exploration activities and
the development of mining projects. For additional information on the activities of the Consolidated
Entity refer to the Review of Results and Operations section in the Directors’ Report.
Significant changes in state of affairs
OZ Minerals produced the first saleable concentrate at its new Carrapateena mine towards the end of
the year. Carrapateena is an underground copper mine in South Australia with an expected life of at
least 20 years. Construction of the Pedra Branca mine was approved in November and development
of the decline commenced. The underground copper mine will form part of the Carajás Hub in Brazil.
The changes in the state of affairs of the Consolidated Entity are discussed on pages 6 to 18.
Dividends
The details relating to dividends announced or paid since 1 January 2018 are set out below:
Record date
Date of payment
Fully franked cents per share
Total dividends $m
12 March 2020
26 March 2020
3 September 2019
17 September 2019
12 March 2019
26 March 2019
3 September 2018
17 September 2018
12 March 2018
26 March 2018
15
8
15
8
14
48.6
25.9
48.4
25.8
41.8
OZ MINERALS 25
Directors and officers
OZ Minerals’ directors and officers for the financial year ending 31 December 2019 and up to the date of this report are
included in the table below:
Position
Experience and expertise
OZ Minerals specific
responsibilities
during 2019
Other directorships
at currently listed
entities
Previous directorships
at listed entities (within
the last three years)
Current directors
Rebecca McGrath
Independent
Non-executive
Chairman
Appointed as a
Non-executive
Director on
9 November 2010
and Chairman on
24 May 2017
BTP (Hons), MA
(App.Sci) FAICD
Andrew Cole
Managing Director
and Chief Executive
Officer
Appointed on
3 December 2014
BAppSc (Hons) in
Geophysics MAICD
Tonianne Dwyer
Independent
Non-executive
Director
Appointed on
22 March 2017
BJuris (Hons),
LLB (Hons)
Ms McGrath is an internationally experienced
business leader, director and chairman.
Ms McGrath’s executive career included 23 years
with BP Plc. She held a range of senior executive
and group executive roles in Australia, Europe and
the UK, including Chief Financial Officer, Chief
Operating Officer and Executive Management
Board member Australia and New Zealand.
Ms McGrath is currently a Non-executive Director
of Investa Commercial Property Fund Holdings
and Investa Wholesale Funds Management Ltd.
Ms McGrath is a member of the Victorian Council
of the Australian Institute of Company Directors.
Ms McGrath is Chairman of Scania Australia (a
subsidiary of Scania AB of Sweden) and Chairman
of not-for-profit organisation Kilfinan Australia.
Mr Cole has over 27 years’ experience in exploration
and operations in the resources industry. Following
exploration geoscientist roles in Australia, Canada,
USA and Mexico with Rio Tinto Exploration (CRA
and Kennecott), Mr Cole spent 10 years in mine
development and mine operations with Rio Tinto
in Australia, China, Canada and the UK.
During his career at Rio Tinto, Mr Cole held various
senior and leadership positions, including General
Manager Operations of the Clermont Region
Operations, including the Blair Athol Mine and
Clermont Mine, Chief Executive Officer of Chinalco
Rio Tinto Exploration and Chief Operating Officer
of Rio Tinto Iron and Titanium.
Ms Dwyer is an independent non-executive public
company director. Ms Dwyer spent over 20 years
in investment banking and real estate fund
management and was a Director of Investment
Banking at Societe Generale/Hambros Bank
advising on mergers and acquisitions, restructuring
and refinancing. Ms Dwyer was Head of Fund
Management at the LSE listed property company,
Quintain Estates and Development plc and was
later appointed to the Board as an Executive
Director. Ms Dwyer is a graduate member of the
Australian Institute of Company Directors and a
member of Chief Executive Women and Women
Corporate Directors.
Chairman of the Board
Member of People &
Remuneration Committee
Member of the
Sustainability Committee
None
Non-executive Director
of Incitec Pivot Limited
since September 2011
Non-executive Director
of Goodman Group
since April 2012
Managing Director and
Chief Executive Officer
Member of the Sustainability
Committee from 8 April 2019
None
Non-executive Chairman
of Avanco Resources
Limited from 13 June 2018
to 11 July 2018
Chairman of the People &
Remuneration Committee
Member of the
Audit Committee
None
Non-executive Director
of DEXUS Property Group
since August 2011
Non-executive Director
of ALS Limited since
July 2016
Non-executive Director
of Metcash Limited
since June 2014
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 26
DIRECTORS' REPORT
OZ Minerals specific
responsibilities
during 2019
Chairman of the
Sustainability Committee
Member of the
Audit Committee
Other directorships
at currently listed
entities
Previous directorships
at listed entities (within
the last three years)
Non-executive Director
of ALS Limited since
February 2015
Non-executive Director
of Newmont Corporation
since June 2019
Non-executive Director
of Austin Engineering
Limited from April 2015
to April 2018
Non-executive Director
of Goldcorp Inc from
January 2017 to April 2019
Member of the
Audit Committee from
1 November 2019
Member of the
Sustainability Committee
from 1 November 2019
Non-executive Director
of Advantage Lithium
since February 2017
Non-executive Chairman
of Agrimin Limited since
August 2019
Non-executive Director
of Orocobre Limited
since January 2019
Managing Director and
Chief Executive Officer
of Orocobre Limited from
April 2007 to January 2019
Non-executive Director of
Leyshon Resources Ltd from
February 2007 to July 2017
Chairman of the
Audit Committee
Member of the People &
Remuneration Committee
Non-executive Director
of APA Group since
March 2018
Managing Director and
Chief Executive Officer
of Alumina Limited from
January 2014 to May 2017
Position
Experience and expertise
Charlie Sartain
Independent
Non-executive
Director
Appointed on
1 August 2018
BEng (Hons),
Fellow (Australasian
Institute of Mining
and Metallurgy),
Fellow (The Academy
of Technological
Sciences and
Engineering)
Richard Seville
Independent
Non-executive
Director
Appointed on
1 November 2019
BSc (Hons) Mining
Geology, MEngSc
Rock Engineering,
MAusIMM, ARSM
Peter Wasow
Independent
Non-executive
Director
Appointed on
1 November 2017
B. Comm, GradDip
(Management),
Fellow (CPA
Australia)
Mr Sartain has more than 30 years’ international
mining experience. He was Chief Executive Officer
of Xstrata’s global copper business for nine years
from 2004. Prior to that, he held senior executive
positions in Latin America and Australia including
General Manager and President of Minera Alumbrera
Ltd in Argentina, General Manager of Ernest
Henry copper/gold mine and General Manager
of Ravenswood Gold Mines in Queensland.
Mr Sartain is Chairman of the Advisory Board of
the Sustainable Minerals Institute at the University
of Queensland and a Board Member of Wesley
Medical Research.
Mr Sartain was also the Chairman of the
International Copper Association, a member of the
Department of Foreign Affairs and Trade’s Council
on Australian Latin American Relations, a member
of the Senate of the University of Queensland and
a Local Councillor of the Dalrymple Shire Council
in Queensland.
Mr Seville has over 35 years’ experience in the
resources sector including 25 years as either
Managing Director or Executive Director of
various ASX, TSX or AIM listed companies.
Mr Seville was Orocobre’s Managing Director
and CEO for 12 years before stepping down in
January 2019. He remains on the Board as a
Non-executive Director.
Mr Seville is a mining geologist and geotechnical
engineer, graduating from the Imperial College
London and James Cook University in North
Queensland. He holds a Bachelor of Science degree
with Honours in Mining Geology and a Master
of Engineering Science in Rock Engineering.
In June 2019, Mr Seville was appointed Chairperson
of Agrimin Limited.
Mr Wasow has extensive experience in the resources
sector as both a senior executive and director.
He formerly held the position of CEO & Managing
Director of Alumina Limited, an ASX 100 Company,
and before that Executive Vice President and Chief
Financial Officer, Santos Limited and in a 20 year
plus career at BHP he held senior positions including
Vice President, Finance and other senior roles in
Petroleum, Services, Corporate, Steel and Minerals.
Mr Wasow is currently the senior independent
Director of the privately held GHD Group and a
Non-executive Director of APA Group. He was also
Non-executive Director of Alcoa of Australia Limited,
AWA Brazil Limitada, AWAC LLC and Non-executive
Director of ASX-listed Alumina from 2011 to 2013
and executive director from 2014 to 2017.
Mr Wasow has also been a member of the Business
Council of Australia, and director of the International
Aluminium Institute and APPEA.
OZ MINERALS 27
Position
Former director
Marcelo Bastos
Independent Non-executive Director
Appointed on 1 September 2018
BEng (Hons), MBA, MAICD
Resigned as a Non-executive Director on 5 April 2019
Officers
Michelle Pole
Company Secretary & Senior Legal Counsel
Appointed on 13 December 2017 LLB, GDLP, GAICD
OZ Minerals specific responsibilities during 2019
Member of the Sustainability Committee.
Ms Pole also holds the office of OZ Minerals’ Senior Legal Counsel. Ms Pole has
spent most of her career in a leading national law firm before moving in-house to the
mineral resources sector. Ms Pole has particular experience in commercial transactions,
corporate advisory and compliance with the ASX, ASIC and other regulatory bodies.
As well as holding a Bachelor of Laws from The University of Adelaide and a Graduate
Diploma in Legal Practice, Ms Pole is also a graduate member of the Australian Institute
of Company Directors and Certificated Member of the Governance Institute of Australia.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 28
DIRECTORS' REPORT
Meeting attendance
Attendance at OZ Minerals Limited Board and Committee meetings
(1 January 2019 to 31 December 2019)
Board meetings
Board committee meetings
A
B
A
B
A
B
Audit
People & Remuneration
Sustainability
B
A
Current directors
Rebecca McGrath
Andrew Cole(a)
Tonianne Dwyer
Charlie Sartain
Richard Seville(b)
Peter Wasow
Former directors
Marcelo Bastos(c)
14
14
12
14
3
13
2
14
14
14
14
3
14
3
–
–
6
6
1
6
–
–
–
6
6
1
6
–
5
–
5
–
–
5
–
5
–
5
–
–
5
–
4
3
–
4
1
–
1
4
3
–
4
1
–
1
Note: MD&CEO and Non-executive Directors who are not Board Committee members also participated in scheduled Board Committee meetings
throughout the year.
A = the number of meetings attended during the time the director held office.
B = the number of meetings held during the time the director held office.
(a) Member of the Sustainability Committee from 8 April 2019.
(b) Appointed as Non-executive Director on 1 November 2019.
(c) Resigned as a Non-executive Director on 5 April 2019.
Directors’ interests
Directors’ interests in the ordinary shares of OZ Minerals Limited
Director
Rebecca McGrath
Andrew Cole
Tonianne Dwyer
Charlie Sartain
Richard Seville
Peter Wasow
Total
Shares number
42,835
342,100
15,000
70,000
–
14,000
483,935
OZ MINERALS 29
Environmental regulation
OZ Minerals and its activities in Australia, Brazil and other international locations are subject to strict
environmental regulations. OZ Minerals’ Prominent Hill, Carrapateena and Carajás operations, along
with its exploration and concentrate shipping activities, operate under various licences and permits
under state, federal and territory laws in Australia, Brazil and other overseas jurisdictions.
OZ Minerals regularly monitors its compliance with licenses and permits in various ways, including
through its own environmental audits as well as those conducted by regulatory authorities and other
third parties. OZ Minerals uses a documented process to classify and report any exceedance of a
licence or permit condition as well as any incident reportable to the relevant authorities. All instances
of reportable environmental non-compliance and significant incidents are reviewed by the Executive
Committee and the Sustainability Committee of the OZ Minerals Board of Directors as a part of this
process. A formal report is also prepared to identify the factors that contributed to the incident or
non-compliance and the actions taken to prevent any reoccurrence.
During the year, OZ Minerals submitted its energy and emissions report to the Clean Energy
Regulator in accordance with the National Greenhouse and Energy Reporting Act 2007 (NGER Act).
KPMG provided limited assurance over OZ Minerals’ energy and emissions report.
KPMG has also provided limited assurance over selected metrics and disclosures in the OZ Minerals
2019 Annual and Sustainability Report against the requirements of the Global Reporting Initiative
Standards. KPMG’s assurance report is available on page 103.
The Company has not incurred any significant liabilities under any environmental legislation during
the financial year.
Insurance and indemnity
During the financial year, OZ Minerals Limited paid premiums with respect to a contract insuring its
directors, officers and related bodies corporate against certain liabilities incurred while acting in that
capacity. The insurance contract prohibits disclosure of the liability’s nature and the amount of the
insurance premium.
The Company’s constitution also allows OZ Minerals to provide an indemnity, to the extent permitted
by law, to officers of the Company or its related bodies corporate in relation to liability incurred by an
officer when acting in that capacity on behalf of the Company or a related body corporate.
The Consolidated Entity has granted indemnities under deeds of indemnity with current and former
Executive and Non-executive Directors, current and former officers, the former General Counsel
(Special Projects), the former Group Treasurers and each employee who was a director or officer of
a controlled entity of the Consolidated Entity, or an associate of the Consolidated Entity, to conform
with Rule 10.2 of the OZ Minerals Limited Constitution.
Each deed of indemnity indemnifies the relevant director, officer or employee to the fullest extent
permitted by law for liabilities incurred while acting as an officer of OZ Minerals, its related bodies
corporate and any associated entity, where such an office is or was held at the request of the
Company. The Consolidated Entity has a policy that it will, as a general rule, support and hold
harmless an employee who, while acting in good faith, incurs personal liability to others as a
result of working for the Consolidated Entity.
No indemnity has been granted to any auditor of the Consolidated Entity in their capacity as
auditor of the Consolidated Entity.
Proceedings on behalf of the Consolidated Entity
At the date of this report there are no leave applications or proceedings brought in respect
of or on behalf of the Consolidated Entity under section 237 of the Corporations Act 2001.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT
30
DIRECTORS' REPORT
Audit and non-audit services
KPMG continues in office in accordance with the Corporations Act 2001. A copy of the lead auditor’s
independence declaration is set out on page 112 as required under section 307C of the Corporations
Act 2001 and this forms part of the Directors’ Report.
OZ Minerals Limited, with the approval of the Audit Committee, may decide to employ the external
auditor on assignments additional to their statutory audit duties where the auditor’s expertise and
experience with the Consolidated Entity are important, and where these services do not impair the
external auditor’s independence.
Amounts paid or payable to the external auditor (KPMG) and its network firms for audit
and non-audit services
Audit and review services
Auditors of the Group – KPMG
Audit and review of financial statements - Group
Audit and review of financial statements - controlled entities
Total fee for audit and review services
Assurance services
Auditors of the Group – KPMG
Assurance of NGERS data
Sustainability assurance
Total fee for audit, review and assurance services
Other services
Auditors of the Group – KPMG
Taxation advice and tax compliance services
Other services
Total fee for other services
Total fees
2019
$
530,000
45,000
575,000
25,800
75,600
676,400
31,310
40,000
71,310
747,710
The Audit Committee has, following the passing of a resolution by the Committee, provided the
Board with advice in relation to KPMG providing non-audit services.
In accordance with the advice received from the Audit Committee, the Board is satisfied that
provision of the non-audit services is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001. The directors are satisfied that the non-audit
services provided by the auditor did not compromise the auditor independence requirements
of the Corporations Act 2001 because:
/ all non-audit services were reviewed by the Audit Committee to ensure they did not impact the
integrity and objectivity of the external auditor; or
/ none of the services undermined the general principles relating to auditor independence as set
out in APES 110 Code of Ethics for Professional Accountants. These include reviewing or auditing
the auditor’s own work, acting in a management or a decision-making capacity for OZ Minerals
Limited or its controlled entities, acting as advocate for the Company or jointly sharing economic
risk and rewards.
OZ MINERALS 31
Matters subsequent to the end of the financial year
Since the end of the financial year, the Board of Directors has resolved to pay a fully-franked dividend
of 15 cents per share on 18 February 2020. The record date for entitlement to this dividend is
12 March 2020. The financial impact of the dividend, amounting to $48.6 million, has not been
recognised in the Consolidated Financial Statements for the year ended 31 December 2019 and
will be recognised in subsequent Consolidated Financial Statements.
There have been no other events subsequent to the reporting date which have significantly affected
or may significantly affect OZ Minerals’ operations, state of affairs or results in future years.
Rounding of amounts
The Company is of a kind referred to in ASIC Corporations Instrument 2016/191 (Rounding in
financial/directors’ reports). Amounts in the financial statements and Directors’ Report have been
rounded in accordance with the instrument to the nearest million dollars to one decimal place, or
in certain cases, to the nearest dollar. All amounts are in Australian dollars unless otherwise stated.
Operating and financial review
Our operations are reviewed on pages 6 to 18 and the Financial Review (page 33) forms part
of the Directors’ Report.
Remuneration report
The Remuneration Report which has been audited by KPMG is set out on pages 54 to 69 and
forms part of the Directors’ Report.
Business strategies and prospects for future financial years
The Operating Review on pages 6 to 18 and the Financial Review on pages 33 to 37 of the
Annual Report set out information on Oz Minerals’ business strategies and prospects for future
financial years. Information in the Operating Review and the Financial Review is provided to enable
shareholders to make an informed assessment about the business strategies and prospects for
future financial years of OZ Minerals. Information that could give rise to likely material detriment
to OZ Minerals, for example, information that is commercially sensitive, confidential or could give a
third party a commercial advantage, has not been included. Other than the information set out in
the Operating Review and the Financial Review, information about other likely developments in
OZ Minerals’ operations and the expected results of these operations in future financial years has
not be included.
Corporate governance statement
The Board is committed to achieving and demonstrating the highest standards of corporate
governance. The Board continues to refine and improve the governance framework and has
practices in place to ensure they meet the interests of shareholders.
The Company complies with the ASX Corporate Governance Council’s Corporate Governance
Principles and Recommendations 3rd Edition (the ASX Principles).
OZ Minerals’ Corporate Governance Statement, which summarises the Company’s corporate
governance practices and incorporates the disclosures required by the ASX Principles, can be
viewed at ozminerals.com/about/corporate-governance/corporate-governance-statement.
Signed in accordance with a resolution of the directors.
Rebecca McGrath
Chairman
Adelaide
18 February 2020
Andrew Cole
Managing Director and CEO
Adelaide
18 February 2020
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT
32
DIRECTORS' REPORT
OZ MINERALS 33
Financial review
OZ Minerals’ net profit after tax (NPAT) for the year was $163.9 million compared to $222.4 million
for 2018, principally due to lower copper sales as Prominent Hill transitions from its higher copper
grade open pit stockpiles and higher exploration and corporate development expenditure. Base
metal markets remained volatile throughout the year as trade tensions and geopolitical uncertainty
dominated over robust fundamentals, albeit a weaker Australian dollar improved comparative A$
copper pricing. A counter response in precious metal markets supported higher gold revenues,
noting that 57% of gold sales were delivered against previously established price hedges reducing
net revenue by $23.9 million.
Underlying NPAT for the period was $163.9 million compared to $228.3 million in the comparative
period in which transaction costs for the Avanco acquisition were treated as non-underlying.
Prominent Hill once again delivered a reliable production and cash cost performance, as underground
mining rates stepped up and higher-grade underground ore was supplemented with open pit
ore stockpiles. Exploration and evaluation expenditure increased as OZ Minerals’ growth pipeline
further developed, with concurrent expansion studies and exploratory drilling in the Prominent Hill,
Carrapateena, Carajás, Gurupi and Musgrave provinces. OZ Minerals’ margin for earnings before
interest, tax, depreciation and amortisation (EBITDA) remained robust at 42% (2018: 48%) while
continuing to invest in exploration and evaluation activities.
OZ Minerals’ closing cash balance of $134.0 million decreased by $371.1 million during the year with
strong operating cashflows utilised for further significant investment at Carrapateena, expenditure on
exploration and evaluation activities, and tax payments and dividends to shareholders.
Variance analysis – underlying NPAT, 31 December 2018 compared to 31 December 2019
250
200
n
o
i
l
l
i
m
$
150
100
50
228.3
29.4
12.2
5.8
14.1
52.8
Decrease in revenue
due to sales volume:
Copper 28.3
Gold (1.6)
Silver 2.7
Total 29.4
Increase in revenue
due to sales price:
Copper
Gold
Silver
Total
(17.1)
26.4
2.9
12.2
13.9
163.9
Increase in other costs:
Exploration &
corporate
development 26.7
Corporate costs:
CTP amortisation 6.5
Corporate costs 8.9
Brazil restructuring
costs 2.6
Other costs 3.2
Foreign exhange
& other 4.9
Total 52.8
Underlying NPAT
for the year ended
31 December 2018
Sales
volume
Sales
price
TCRC and
royalties
Production costs
Other costs
Tax and
interest
Underlying NPAT
for the year ended
31 December 2019
OZ Minerals’ financial results are reported under International Financial Reporting Standards (IFRS). This Annual and Sustainability Report includes certain non-IFRS measures including Underlying
EBITDA and Underlying NPAT. These measures are presented to enable understanding of the underlying performance of the Consolidated Entity. Non-IFRS measures have not been subject to audit.
Underlying EBITDA and Underlying NPAT are included in Note one Operating Segments, which form part of the Consolidated Financial Statements.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT
34
DIRECTORS' REPORT
Revenue
Gross revenue of $1,173.9 million was lower than the previous year by $17.2 million with lower
copper and gold sales partially offset by higher Australian dollar realised copper and gold prices.
The realised $A copper price was 2% lower than in the comparative period while the net $A gold
price was 12% higher. Revenue includes $23.9 million in realised losses on gold hedges.
Realisation costs
Treatment charges and refining costs (TCRCs) were $7.2 million lower as a result of improved trading
terms and lower refining charges in the global market.
Royalty expense increased by $1.4 million due to the non-deductibility of hedging losses in calculating
royalty was payable.
Production costs
Absolute production costs in 2019 were higher than the previous year by $14.1 million, with the
inclusion of the Carajás operations for the full year (only from the second half of 2018 in the
previous year), an increased proportion of underground ore, higher transport and site administration
expenditure, partially offset by the net realisable value adjustment recognised during the year.
Exploration and corporate development expenditure
Exploration and corporate development expenditure of $93.9 million was incurred during the year
to progress the Carrapateena expansion study, drilling and development studies in the Gurupi and
Carajás provinces, and other exploration earn-in arrangements in the growth pipeline:
/ Carrapateena expansion $18.6 million
/ Brazil study costs and exploration $37.6 million
/ other exploration and development expenditure $37.7 million.
Other expenditure
Corporate, general and administration, and other costs of $50.2 million increased by $21.2 million
over the prior year with further organisation capability build, higher insurance costs from a rising
premium market and restructuring in Brazil. The corporate, general and administration costs in
the year included a full year amortisation charge of $6.5 million relating to intellectual property
technology associated with the Concentrate Treatment Plant.
The income tax expense of $64.7 million was $25.8 million lower than the previous year as a result
of the lower profit and the benefit of restricted prior year tax losses recognised during the year.
Finance expense of $10.0 million was $4.9 million higher than the previous year following the
implementation of AASB 16 Leases, which resulted in the recognition of finance charges in relation
to lease liability provisions.
OZ MINERALS 35
Cash balance and cash flow
n
o
i
l
l
i
m
$
1,200
1,000
800
600
400
200
0
510.6
763.9
505.1
121.6
3.8
134.0
Opening January
2019 cash balance
Operating
activities
Investing
activities
Financing
activities
Effect of exchange
rate changes
Closing December
2019 cash balance
Operating cash flows
Operating cash flows of $510.6 million for the year were $61.0 million higher than in 2018.
Customer receipts during the year were lower by $64.2 million due to the timing of concentrate
sales. Payments to suppliers and employees were $492.7 million for the year, $57.5 million lower
than in 2018 primarily due to the reclassification of certain payments to suppliers as financing
cashflows under AASB 16 Leases. Payments for exploration and corporate development expenditure
increased by $28.9 million reflecting the ongoing investment in the growth pipeline during the year.
PAYG tax payments were $104.6 million lower than the previous year which included a finalisation
payment for the Company’s tax liability from 2017, prior to the Company’s transition to a PAYG
regime, and lower earnings before tax for the year.
Investing cash flows
Net investing cash flows of $763.9 million were attributable to development costs at Carrapateena,
general property, plant, equipment and mine development at Prominent Hill and the Carajás, and
study costs associated with the West Musgrave project:
/ capitalised Carrapateena project development costs $579.2 million
/ Prominent Hill mine development costs $56.6 million and growth costs of $45.9 million
(principally related to the Malu Paste plant)
/ Brazil including capitalised exploration and evaluation costs $9.9 million
/ sustaining and other capital expenditure including power transmission infrastructure $46.1 million
/ West Musgrave capitalised exploration and evaluation costs $26.2 million.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT
36
DIRECTORS' REPORT
Financing activities
Cash outflows relating to financing activities comprised $74.3 million in dividend payments to
shareholders and $47.3 million in payments to suppliers now classified as lease payments following
the application of AASB 16 Leases.
Since the end of the year, the Board of Directors has resolved to pay a final dividend for the 2019
financial year amounting to $48.6 million. This final dividend will be fully franked for Australian
tax purposes.
Balance sheet
The total equity of the Company increased by $64.7 million to $2,979.9 million. The increase resulted
mainly from the year’s NPAT of $163.9 million, partially offset by returns to shareholders in the form
of dividends amounting to $74.3 million and a decline in the value of open gold derivative contracts
of $28.1 million (net of tax). The movement in the net assets of the Company since 31 December
2018 is provided below:
3,400
3,200
3,000
2,800
2,600
n
o
i
l
l
i
m
$
2,400
2,200
2,000
2,915.2
371.1
144.9
24.6
286.7
Increase in trade
payables
predominantly
due to
Carrapteena
construction
activity.
730.8
Increase in other
assets primarily
due to recognition
of Right of Use
Assets under
AASB 16.
2,979.9
Derivatives,
other liabilities,
provisions and
deferred tax
liabilities including
recognition of
Lease Liabilities
under AASB 16.
Reduction in cash
balance from
investment in
Carrapateena
and dividends.
140.8
PP&E increase
primarily due
to capital
expenditure at
Carrapateena.
12.2
Decrease in
inventory a result
of continued
processing of open
pit ore stockpiles.
Increase in Trade
receivables due
to timing of
shipments.
Net asset 2018
Cash
Inventory
Trade
receivables
PP&E and
Exploration assets
Lease and
other assets
Trade payables
Tax and other
liabilities
Net assets 2019
OZ MINERALS
37
At the end of the year, the Company held a cash balance of $134.0 million and undrawn debt
facilities of $300.0 million. The reduction in the cash balance was a result of operating cash flows
being offset by ongoing investment in Carrapateena, Prominent Hill, West Musgrave, and Property
Plant and Equipment (‘PP&E’), as well as the payment of dividends. Inventories of $537.6 million
at the end of the year had reduced by $140.8 million since 1 January 2019 as a result of the
consumption of open pit ore from stockpiles, with the associated cost recognised in the income
statement within inventory adjustments. As open pit ore stockpiles are consumed, the previous
costs of mining this ore and the related capitalised depreciation (collectively comprising ‘open pit
ore inventory’) will continue to be progressively amortised through the income statement.
Trade receivables increased due to the timing of shipments, with a final shipment for the year in late
December 2019. PP&E and Exploration assets increased during the year mainly due to the ongoing
capitalisation of underground development expenditure at Prominent Hill, capital expenditure at
Carrapateena, capitalised West Musgrave exploration and study costs, and general sustaining capital
expenditure, partially offset by depreciation.
Lease assets and liabilities were recognised during the year as the consolidated entity adopted
the new accounting standard AASB 16 Leases from 1 January 2019. The Standard requires the
recognition of an asset and associated liability where the lease provides certain committed use rights
over infrastructure and equipment within contracts.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 38
DIRECTORS' REPORT
OZ Minerals Risk Management
OZ Minerals’ operating performance and
financial results are subject to a wide
range of risks and uncertainties including
financial, political, social, operational and
environmental factors that create both threats
and opportunities. The consolidated entity
manages and mitigates current and emerging
risks to minimise adverse impacts and maximise
beneficial outcomes. Our risk management
framework emphasises risk-aware decision-
making to achieve OZ Minerals’ Strategy.
At the centre of OZ Minerals’ Strategy is Value
Creation. Creating Value for stakeholders is
an outcome of effective risk management.
Our risk impact assessment table is centred
around five stakeholder pillars and to align
with our strategic focus, risks are assessed to
determine the potential impact on each pillar.
Risk management accountability and oversight
is a central part of the OZ Minerals governance
framework. The Board, its sub-committees and
the Executive leadership provide oversight and
monitoring of risk management process and
practice. Collectively, they are responsible for
ensuring the Company maintains an effective
risk management standard and internal control
environment.
The Board has an oversight responsibility and
determines the overall risk appetite for the
consolidated entity. OZ Minerals’ corporate
governance structure and communication
channels enable timely responses to current
and emerging risks.
Risk Management
Oversight and Governance
Board: The Board reviews and monitors the
material risks of the Company and its system
of internal compliance and controls. The
Board oversees the risk management process
and approves the risk management standard,
including the Company’s risk appetite. The Board
regularly reviews and monitors the Company’s
risk profile and management report risks
through the Company’s monthly Risk Report.
The report includes an overview of Company
risks, a summary of key changes to the risk
profile, critical control updates, and the actions
implemented to reduce the level of uncertainty
and improve the manageability of risks. The
Board requires CEO and Executive leadership to
implement a system of control for identifying,
assessing, managing and reporting risks in line
with the risk management framework.
Board Committees: The Audit, Sustainability,
and People & Remuneration Committees review
risk management reports covering risks, controls
and actions to manage risks to the business
within their respective remits.
The Audit Committee assists the Board in the
effective discharge of its responsibilities in
relation to financial reporting and disclosure
processes, internal financial controls, funding,
financial risk management, and oversight of the
internal control and risk management system’s
effectiveness.
The Sustainability Committee assists the Board
in the effective discharge of its responsibilities
in relation to safety, health, environment and
community (SHE&C) matters including how
the Company is reporting and managing risks
relating to SHE&C and its requirements for
internal notification, investigation, reporting
and continuous improvement.
The People and Remuneration Committee assists
the Board in discharging its responsibilities
in relation to the remuneration of directors,
executives and employees, succession
planning, the establishment and monitoring
of the Employee Value Creation Policy, and
oversight of risk relating to people performance
management, Company culture, succession
planning, capacity and capability, and diversity
and inclusion.
The Board retains direct accountability and
oversight of all material risks outside the
Board Sub-Committees’ remits. These include
risks relating to mergers and acquisitions, the
Company’s growth strategy, sovereign uncertainty,
Mineral Resources and Ore Reserves estimates,
macro-economic and market-related risks.
Executive Leadership: The Executive
Leadership team is responsible for the effective
implementation of the risk management
framework and system of control for identifying,
assessing, managing, and reporting risk across
the Company. The Executive leadership team
reviews and approves the risk profile for the
organisation and ensures Assets and Corporate
Functions embed risk management process and
practice into business systems and processes.
Corporate Risk Function: The Corporate
Risk Function supports and coordinates the
implementation of the risk management
framework, embeds risk management into core
business processes, and builds risk management
capability and a risk-aware culture across the
business. The Corporate Risk Function oversees
OZ Minerals’ Risk Management Framework and
develops, governs, supports and reports on the
effective implementation of risk management
to the Executive Leadership Team, the Board
and its sub-committees.
OZ MINERALS 39
OZ Minerals operates a four line of defence
risk management governance model
04
03
02
01
External Audits
Statutory and Regulatory
Audits conducted by third parties
Independent Internal Audits
Internal Audits conducted in accordance
with an approved Internal Audit Plan
Enable and Monitor
Asset and Corporate Function Leads
validate first line activities to assure
risks are managed effectively
Identify and Implement
Risk and Control Owners apply Process and
Performance Standards to identify risks,
implement controls and verify control
effectiveness
The first line of defence
Process Standards define the approval
escalations between the Board, CEO,
Corporate Functions and Assets based on
risk. The Risk Management Process Standard
outlines the mandated process for escalation
and the roles that organisational authority
levels play. Risk responsibility for identifying,
assessing, managing and reporting resides
with all employees who are responsible for
considering risks when making key decisions,
implementing controls and monitoring risks
during their activities.
The second line of defence
The senior leadership of the Assets and
Corporate Functions assure compliance
with the minimum controls in OZ Minerals’
Performance and Process Standards and
provide subject matter expertise and insights
to support the delivery of the standards.
The third line of defence
All Process and Performance Standards are
subject to the Audit and Assurance Process
Standard, where compliance against the
Standard and opportunities for improvement
are monitored by the Corporate Audit Function
in addition to the self-assurance activities
undertaken by the Assets and Corporate
Functions themselves. The Internal Audit and
Assurance Function provides independent
assurance over the governance, compliance
and internal control system and processes
across the business.
The fourth line of defence
External Audit provides an independent
assurance that the internal control system
is adequate, and that OZ Minerals’
operations comply with the minimum
requirements of relevant regulatory,
legislative and associated standards.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 40
DIRECTORS' REPORT
2019 Inherent Risk trend summary
Risk Trend
External Sector and Company risks
Internal Company risks
Increasing
Risk
/ Macroeconomics and Geopolitics
/ Climate change
Decreasing
Risk
No Change
in Risk
/ Sovereign uncertainty
/ Commodity prices and foreign exchange rates
/ Community relations
and Licence to Operate
/ Human Rights and Ethics
/ Continuity of power supply
/ Single material operating asset
/ Growth and development
/ Project execution and delivery
/ Customer management
/ Contract management
/ Strong balance sheet and liquidity
/ Mineral Resource and Ore Reserve
/ Tailings storage facility (TSF)
/ Geotechnical failure
/ Operational safety and health
/ Mine closure and rehabilitation
/ Attract and retain talent
/ Compliance, regulatory and legislative
/ Managing and protecting the environment
OZ MINERALS
41
The table below details inherent risks that could materially impact OZ Minerals’ ability to deliver its Strategy and Business Plans.
Risk
Mitigation/actions
Threat
Climate change can cause disruption to mine
production, logistics, and water supply as a result
of extreme weather events.
As regulatory agencies respond to climate change over
the medium term, costs of inputs may rise and restrictions
may be placed on how certain resources are provided,
transported, and used. This may adversely impact the
execution of our strategy and the ability of our assets
to operate efficiently.
Opportunity
Climate change, combined with regulatory change, also
has the potential to be a catalyst for growth in industries
that require copper and could result in upward pressure
on copper prices.
Ability to proactively use lower-emission sources of
energy, efficient production and distribution processes,
new technologies, water and energy efficiency, and
proactive participation in the carbon market can result
in reduced operating costs, increased production capacity,
an improved revenue and liquidity position.
This can also increase reputational benefits and create
value for our key stakeholders.
Threat
Political uncertainty, trade protectionism, and changes
in relations between countries can impact the Company’s
ability to access resources and markets needed to achieve
our strategy.
Opportunity
Continue to develop the exploration pipeline and resource
portfolio. Assess non-organic acquisitions in relatively
politically stable jurisdictions as opportunities present.
OZ Minerals is committed to reducing the energy
and water intensity of its operations, developing
innovative practices in relation to chemical processing,
and being more efficient in its transportation and
processing activities.
The Company’s power strategy is focussed on the
four key elements for all its operations: Distribution,
Generation, Procurement, and Demand Management.
Initiatives are underway across operations to reduce the
Company’s environmental footprint, including energy
intensity, water use, waste management, and transport
and logistics.
OZ Minerals focuses on reducing carbon emissions,
investing in low emissions technologies, managing
climate-related threats and opportunities, and working
collaboratively with others to contribute to identify
improvements and transformational change.
OZ Minerals has published a Climate Change Statement
on its website which commits to playing its part in
achieving net-zero carbon emissions by 2050.
OZ Minerals has prepared a roadmap for reporting
its integrated climate change risks and climate-related
financial disclosures in line with the Task Force on
Climate-related Financial Disclosure (TCFD) framework.
The TCFD framework will also provide a process to
gain a better understanding of physical and financial
climate-related threats and opportunities, which can
then be further integrated into our Company standards
and policies.
OZ Minerals regularly monitors geopolitical and
macroeconomic trends to understand potential impacts
on our business and seeks to identify mitigating actions
as soon as possible, if practicable.
The Company also engages with governments and other
key stakeholders to understand and communicate the
impact of any potential impacts from changes in trade
or resource policies.
Context
Strategic
Climate change
OZ Minerals recognises that the physical
and non-physical impacts of climate change
may affect its assets, productivity, the
markets in which it sells its products, and
the communities in which we operate. Risks
related to the physical impacts of climate
change include acute risks resulting from
increased severity of extreme weather events
and chronic risks resulting from longer-term
changes in climate patterns.
Non-physical risks arise from a variety of
policy, regulatory, legal, technology, financial
and market responses to the challenges
posed by climate change and the transition
to a lower-carbon economy.
2019 Risk Trend Analysis
Increasing Risk
Community, investor and regulatory
standards and expectations in relation
to climate change continued to increase
during 2019.
Macroeconomics and Geopolitics
OZ Minerals currently operates in
Australia and Brazil, has exploration
activities in multiple countries and may
consider operating in new locations to
access desired resources. The Company’s
customers and suppliers are also located
in international markets.
Geopolitical and macroeconomic
developments have the potential to restrict
our ability to access resources in certain
countries or effectively trade in markets.
Any restrictions will impact our ability
to realise our strategy as competition for
resources intensifies, existing reserves are
depleted, and supply sources become
more expensive to develop.
2019 Risk Trend Analysis
Increasing Risk
OZ Minerals’ exposure to macroeconomics
and geopolitics risks are anticipated to
increase in the short to medium term due to
heightened political and policy uncertainty.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 42
DIRECTORS' REPORT
Context
Risk
Mitigation/actions
Single material Operating Asset
The Prominent Hill mine generates most
of the Company’s income and cash flow.
The occurrence of any inherent operational
risks can interrupt the asset’s operations
and performance to meet or exceed
planned objectives.
Threat
Operating only one material operating asset exposes
the Company to financial and operational risks.
Business interruptions may arise from several
circumstances, including major operational failures
such as significant safety or underground incidents
and major infrastructure failure.
2019 Risk Trend Analysis
Decreasing Risk
Ramp-up of Carrapateena operations in
2020 and beyond will decrease the risk.
Brazil Hub strategy now also in place
and execution underway.
Opportunity
The ability to develop and execute new projects such
as Carrapateena safely, on time, and within budget,
enhances the Company’s income, cash flow, balance
sheet, and reputation with all key stakeholders.
A strong balance sheet and liquidity position allows
the Company to pursue its growth pipeline.
Growth and development
A key element of the Company’s Strategy is
growth through acquisition or development
of value accretive copper assets.
OZ Minerals’ ability to create value for
key stakeholders by successfully executing
mergers, acquisitions and divestments
may vary.
2019 Risk Trend Analysis
No Change in Risk
There are no changes identified that
are expected to significantly increase
OZ Minerals’ exposure in this area.
Project Execution and Delivery
Successful execution of OZ Minerals’
growth Strategy depends on its ability
to deliver projects on time, safely, within
budget and scope. The Company’s ability
to deliver projects successfully may vary.
2019 Risk Trend Analysis
No Change in Risk
There are no changes identified in the
risk environment that are expected to
significantly increase OZ Minerals’ exposure.
Whilst additional execution capability has
been developed through delivery of the
Carrapateena project, each project remains
unique and carries varied and specific
challenges.
Threat
In an environment of prospective commodity prices
and expected long-term shortages in copper supply,
OZ Minerals competes with other entities to acquire and
develop projects that generate superior stakeholder value.
Divestment and acquisition activity may result in value
destruction by realising less than the fair value for
divestments or paying more than fair value for acquisitions.
This could result in pressure on the Company’s liquidity
position and/or reduce the Company’s ability to deliver
its growth Strategy.
Opportunity
The existence of large resources at the Prominent Hill,
Carrapateena, Musgrave, Carajás and Gurupi Provinces,
other exploration joint ventures, and the prospectivity
of the Gawler Craton provide the Company with options
to deliver on the growth Strategy.
OZ Minerals’ success in an acquisition, merger, or
divestment on good terms will provide sustainable
future cash flow and/or future growth optionality.
Threat
Mine development projects are inherently exposed to
risks relating to scope definition, cost estimation accuracy,
and a number of other external factors that present threats
to a project’s cost, efficiency, and profitability. These are
not all within the Company’s control.
A delay or overrun of a project schedule could negatively
impact the Company’s profitability, cash flows, asset
carrying values, growth opportunities, and reputation
with key stakeholders.
Opportunity
An ability to develop projects safely, on time, and within
budget enhances the Company’s reputation, license to
operate, stakeholder confidence, and increases cash flow
and returns to all stakeholders.
An increase in cash flow enables the Company to pursue
its growth Strategy and provide value across its five
stakeholder pillars.
Prominent Hill now operates an integrated underground
mine with multiple areas. Following the completion
of the open pit, the de-risked ore stockpiles increase
certainty of available ore to the operations.
The Company has an active program that focuses on
using trigger action response plans to maintain the
ongoing stability of the open pit walls as the pit is now
used for trucks carrying ore to exit the underground
mine. The OZ Minerals maintenance and engineering
team has developed robust procedures and practices
to ensure they are operating the processing plant with
minimal disruption and at high throughput levels.
Progress the development and ramp-up of an additional
significant operating asset at Carrapateena.
The Company has also developed a strategy to develop
the Carajás province in Brazil via a low risk, modest
capital processing hub strategy where existing processing
infrastructure is serviced by several small mines, one
of which, Pedra Branca, is now in construction.
OZ Minerals has a clear pipeline of projects and gated
plans which ensure a disciplined approach to leverage
the potential of the resource base.
Each opportunity is evaluated with due care and relies
upon expert opinion, both internal and external where
necessary, to ensure that any potential transaction is
value accretive across all stakeholders.
OZ Minerals maintains a segregated approach to its
identification and then subsequent review of potential
transactions and projects to ensure appropriate
governance is applied over the assessment of financial
risk and returns.
OZ Minerals maintains a robust framework to deliver
growth through Merger, Acquisition and Divestments
and Exploration Process standards.
OZ Minerals ensures its projects go through a process
of internal and independent external review to verify
the engineering, technical, and financial scope definitions
and other assumptions.
The Company manages project costs through sound
procurement practices and governance. OZ Minerals
maintains a strong focus on contractor management
and undertakes rigorous third-party due diligence and
assurance as part of its engagement.
Stakeholder management in project development is
a focus from the start, with a clear understanding of
who we are working with and a co-operative approach
to engagement.
Project approval, monitoring and progress status
evaluation are performed in line with OZ Minerals’
project governance framework through the Process
and Performance Standards.
OZ MINERALS 43
Context
Risk
Mitigation/actions
Continuity of power supply
The Prominent Hill and Carrapateena
operations are both located in South
Australia, with common sources of
generation through the connected grid.
2019 Risk Trend Analysis
Decreasing Risk
While power infrastructure may be
vulnerable to extreme weather events,
actions have been taken by the South
Australian Government and private
companies to shore up generation stability
since the weather event in 2016 which
interrupted supply in South Australia.
International Operations
Sovereign uncertainty
and inherent risk
The Company’s operations are located
across several jurisdictions, which
exposes the Company to a wide range
of economic, political, societal, and
regulatory environments.
OZ Minerals recognises the value of positive
engagement with a range of stakeholders
and seeks to develop collaborative and
mutually beneficial partnerships through
our partner-to-operate strategy.
2019 Risk Trend Analysis
No Change in Risk
OZ Minerals’ exposure to sovereign
uncertainty is expected to remain
relatively stable.
Market
Customer management
OZ Minerals markets copper concentrate
to overseas and local customers.
Any disruption to the production of
saleable copper concentrate and logistics
chain from production through to delivery
to the customer can result in significant
financial and reputational impact.
2019 Risk Trend Analysis
No Change in Risk
There are no changes identified that
are expected to significantly increase
OZ Minerals’ exposure.
Threat
OZ Minerals competes with other power users for a
competitively priced uninterrupted power supply within
the prevailing environment of volatile electricity prices
and potential power shortages.
Unavailability of power can disrupt operational
performance, revenue, cash flow, employee engagement,
and value creation to stakeholders.
The Company has developed a power strategy for the
Gawler Craton to align with its business strategy and
demand needs. This is focussed on four key elements:
Distribution, Generation, Procurement, and Demand
Management. The Hill to Hill Project will both secure
and extend distribution options within the region.
The Prominent Hill and Carrapateena electricity
supply contracts ensure energy requirements are met.
Opportunity
OZ Minerals can work collaboratively with other
companies in the region to share infrastructure or
provide back-up arrangements.
Threat
Adverse actions by governments and others can result in
operational/project delays or loss of our license to operate.
Other potential actions can include expropriation, changes
in taxation, and export or foreign investment restrictions
- which may threaten the investment proposition, title,
or carrying value of assets.
Legal and legislation requirements with respect to
policies such as tailings dams operations, energy, climate
change, and mineral law may also change in a way that
increases costs.
Opportunity
Proactive engagement with governments, communities,
and other stakeholders can increase access to new
resources, support stable and predictable investment and
operational environments, and shape mutually beneficial
policies and legal/regulatory frameworks.
Threat
Concentrate marketability depends on global mine
supply, smelter demand, concentrate grades, and
impurities in the product. OZ Minerals’ concentrate
contains copper, gold and silver as well as some
impurities such as fluorine and uranium.
Regulators in various jurisdictions may change limits
or their approach to impurity assessment guidelines
in concentrate. This may impede the importation of
concentrate into those jurisdictions and result in
additional processing or treatment requirements
related to the ore, tailings or concentrates, or
challenges with selling, transporting or importing
OZ Minerals’ concentrates in various jurisdictions.
Opportunity
Short to medium term global copper demand is forecast
to be higher than copper mine supply due to existing and
new uses of copper such as for electric vehicles. Increase
in copper demand will increase the Company’s cashflow
position and enables the Company to pursue its growth
pipeline to create value across all stakeholders.
The Company’s operations comply with policies and
standards which provide a core component of the
Company’s governance framework on risk management,
human rights, cyber threat, data privacy, business
integrity, and external communications.
OZ Minerals continues to develop and maintain long-
term relationships with a range of international and
national stakeholders.
OZ Minerals monitors jurisdictional, including sovereign
risks, and take appropriate action.
OZ Minerals has developed customised solutions in
partnership with customers. These match smelter demand
and production from OZ Minerals’ mines to concentrate
grade and timing, along with a range of controls to
manage impurity levels.
OZ Minerals has a number of marketing options in
addition to this, including, but not limited to, ore
blending, concentrates blending, and additional flotation
treatment in the processing plant. It also maintains
technical know-how in relation to its concentrate
treatment plant technology.
OZ Minerals maintains a diverse customer portfolio
to mitigate against the risk of regulatory changes to
importation requirements.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 44
DIRECTORS' REPORT
Context
Risk
Mitigation/actions
For revenue in 2019, OZ Minerals swapped the
average forward price on each copper concentrate
sale to a fixed price in the period of sale.
In 2016 OZ Minerals entered into gold forward
contracts to fix the gold price on 75% of the
estimated gold content of the Prominent Hill gold
ore stockpile to mitigate downside risk.
The remaining hedge book covers about 64% of
estimated annual gold sales in 2020 and 2021.
OZ Minerals does not actively hedge exchange
rate exposures.
OZ Minerals aims to operate its mines with a low cost
of production relative to global copper producers as a
form of natural hedge. This ensures resilience to low
commodity prices and an ability to maximise margins
during high commodity prices.
OZ Minerals’ clear business strategy, capital discipline,
and a conservative capital structure encourage lenders
and shareholders to continue investing in the business
and to attract new capital on attractive terms and
at competitive pricing.
OZ Minerals manages debt maturities to spread
repayment and minimise refinancing risk.
OZ Minerals manages credit exposure to ensure the
Group capital structure is not compromised if a finance
counterparty fails to perform its financial obligation.
OZ Minerals engages with reputable contractors who
have the technical ability, proven track record, and
financial capability to execute its projects.
Competitive procurement processes and embedded
performance structures in contracts ensure that the
Consolidated Entity mitigates risks of non-performance
by contractors while deriving the highest value for
shareholders.
OZ Minerals adopts a more collaborative and integrated
partnership with its key contractors to ensure alignment
and the delivery of mutual value.
Commodity prices and exchange rates
Commodity prices are driven by global
market demand and supply. Exchange
rates are also influenced by international
economic activity and geopolitical factors.
The timing, direction and the extent
of commodity price and exchange
rate movements is uncertain.
Threat
OZ Minerals is a price taker in the global commodities
market and in the Brazilian Real and Australian Dollar
currency markets.
A decrease in commodity prices or adverse foreign
exchange rate movements will reduce cash flow,
profitability, and total shareholder returns. Long-term
price volatility or sustained low prices may adversely
affect access to capital.
2019 Risk Trend Analysis
No Change in Risk
We do not anticipate any material
change in the Consolidated Entity’s
exposure to commodity prices and
exchange rates in 2020.
Capital Management
Opportunity
An increase in commodity prices and/or favourable
foreign exchange rate movements generates positive cash
flow and strengthens the Company’s liquidity position,
enabling the Company to pursue value creation growth
options and/or increase total shareholder returns.
Strong balance sheet and liquidity
The Company maintains a strong balance
sheet and appropriate liquidity position to
fund its operations and capital investment
plans through the global economic cycles.
Threat
The Company’s ability to refinance and attract sufficient
new capital to fund operations and growth through an
economic downturn could be compromised by a weak
balance sheet.
2019 Risk Trend Analysis
No Change in Risk
The risk is expected to remain relatively
stable. The Board intends to maintain
a conservative gearing position as debt
is drawn.
Commercial
Contract Management
Many aspects of the Prominent Hill,
Carrapateena and Carajás operations,
as well as the Company’s exploration
and development activities, are conducted
by contractors.
Contractors play a major role in delivering
the Company’s production and cash
positioning - these relationships may not
always develop as planned. The Company’s
workforce is made up of a combination
of permanent employees and contractors.
OZ Minerals recognises the importance of
appropriate contractor selection and effective
management of contractors from a safety,
cost, quality, schedule, and performance
perspective to the success of our business.
2019 Risk Trend Analysis
No Change in Risk
There are no changes identified that
are expected to significantly increase
OZ Minerals’ level of exposure.
Opportunity
Strong internal capital management and favourable
market conditions could increase liquidity, balance
sheet strength, and increase total shareholder returns.
Threat
The operating results of OZ Minerals is heavily
dependent on the performance of its contractors.
The production and capital costs incurred by
OZ Minerals are subject to a variety of factors,
including and not limited to:
/ fluctuations in input costs determined by global
markets (e.g., electricity, fuel and other key consumables)
/ changes in economic conditions that impact on the
margins required by contracting partners
/ changes in mining assumptions, such as ore grades
and pit designs.
Opportunity
Partnering with key suppliers allows work to be
performed within an environment of mutual trust,
commitment to shared goals, and open communication.
It establishes a working relationship based on a mutually
agreeable plan of cooperation and teamwork. Through
close communication and establishing mutually agreeable
goals, outstanding results can be achieved. The objective
is a shared value outcome between all parties.
OZ MINERALS 45
Context
Risk
Mitigation/actions
Exploration, Resource and Reserve
Mineral Resource and Ore Reserve
Mineral Resource and Ore Reserve estimates
involve areas of significant estimation and
judgment that, if changed, could result in the
need to restate Ore Reserves and mine plans.
Also, the success of the Company’s
exploration activity may vary due to the
inherent risk and uncertainty involved in
identifying new deposits and developing
orebody knowledge to our new and
existing operations.
2019 Risk Trend Analysis
No Change in Risk
There are no material changes identified
that are expected to significantly increase
OZ Minerals’ level of exposure in 2020.
As the Company continues to grow the risk
level may increase commensurate with the
quantum of resource opportunities.
Operational
Tailings Storage Facility (TSF)
Tailings Storage Facilities are dynamic
structures and maintaining their integrity
requires consideration of a range of factors,
including appropriate engineering design,
quality construction, ongoing operating
discipline, and effective governance
processes.
2019 Risk Trend Analysis
No Change in Risk
There are no changes identified that
are expected to significantly increase
OZ Minerals’ level of exposure. OZ Minerals
does not operate upstream tailings facilities.
Geotechnical Failure
The open pit and underground mining
operations are subject to geotechnical
uncertainty and adverse weather conditions.
These could manifest as pit wall failures
or rock falls, mine collapse, cave-ins, or
other failures to mine infrastructure and
reduced productivity.
2019 Risk Trend Analysis
No Change in Risk
There are no changes identified that
are expected to significantly increase
OZ Minerals’ level of exposure.
Threat
The preparation of these estimates involves the
application of significant judgment and no assurance
of mineral recovery levels, or the commercial viability
of deposits can be provided. The Company reviews and
publishes its reserves and resources annually.
The threat that new information on resource and reserves
come to light means that the economic viability of
some Ore Reserves and mine plans may be estimated
downwards. As a result, operations and projects may
be less successful and of shorter duration than initially
anticipated, and/or the asset value may be impaired.
Also, the inability to discover new resources or
projects could undermine the strategy of future growth.
Opportunity
The volume of ore in reported reserves/resources is based
on the geological, commercial, and technical information
available at the date of the report that is, by its nature,
incomplete. As new information comes to light, the
economic viability of some Ore Reserves and mine plans
can be restated upwards. As a result, projects may be more
successful and of longer duration, than initially anticipated.
In addition, the discovery of a new viable orebody can
significantly improve future growth options.
Threat
The collapse of a TSF has the potential to impact the safety
of employees and community in the vicinity of the area,
Company growth, the mine operation, the environment
and long-term Company reputation.
Opportunity
Reduction of processing plant waste into TSFs using mining
ore preconcentration technology. In the Carajás, reducing
the processing plant waste going into the TSF by using
the soon to be exhausted Antas Pit as a TSF (subject to
approvals). This will reduce the need to create and license
a new TSF area.
Optimise the expansion of the Prominent Hill filter stack
tailings storage capacity to reduce waste disposal into the
TSF as the pilot for the organisation’s continuous pursuit
for more sustainable tailings disposal methods in Australia.
The Mineral Resource and Ore Reserve estimates
and mine plans have been carefully prepared by the
Company in compliance with the Joint Ore Reserves
Committee (JORC) guidelines and in some instances,
are verified by independent mining experts or
experienced mining operators.
The estimation of the Company’s reserves and
resources involves analysis of drilling results, associated
geological and geotechnical interpretations, operating
cost and business assumptions, and a reliance on
commodity price and exchange rate assumptions.
Each estimate is reviewed by a committee of peers
to challenge the applied assumptions.
The Company’s production plan is based on published
reserves and resources.
OZ Minerals is committed to proactively managing TSFs
across its operations through design and construction
specifications, continuous maintenance, governance,
inspection, and monitoring programs.
The ongoing management controls include management
reviews, annual independent reviews, compliance with
regulatory and license requirements, the Australian
National Committee of Large Dams (ANCOLD) guidelines
and the TSF Operational Manual, geotechnical reviews
and monitoring, detailed monitoring plans for the
periods of closure and post-closure until completion
of rehabilitation, periodic stability analysis and
comprehensive dam design reviews.
Threat
The concurrent mining of multiple underground areas
at the Prominent Hill mine will lead to increased
underground mining activities.
The Carajás mine open pit depth will increase as mining
concludes. Failure of underground operations or open pit
walls can result in loss of life, reputational damage, loss
of licence to operate, disruption to operations, increased
costs or environmental damage.
OZ Minerals operates systems that prevent, monitor,
and respond to changes in geotechnical structures in
the open pit and underground to ensure the safety of
personnel working in the affected areas. Activities are
undertaken to reduce the risk of geotechnical failure
to as low as reasonably possible.
The Company has an active program which focuses
on using trigger action response plans to maintain the
ongoing stability of the underground and open pit walls.
Opportunity
Creating a safe work environment by removing people from
unsafe activities and transforming underground mining by
embedding digitalisation and automation technologies.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 46
DIRECTORS' REPORT
Context
Risk
Mitigation/actions
Safety, health, environment and community (SHEC)
Operational safety and health
OZ Minerals is committed to high
standards in the safety of its operations,
including employees, contractors, and
the communities in which we operate.
Protecting the health and wellbeing of
our workforce is vital to meet current
and future growth requirements.
2019 Risk Trend Analysis
No Change in Risk
OZ Minerals’ exposure to operational
safety and health risks is expected to
remain relatively stable.
OZ Minerals is committed to the safety of its people, and
all work processes have a high health and safety focus.
OZ Minerals operates in partnership with its contractors
and is actively building a shared health and safety
culture between employees and the contractors who
work at our sites.
Active engagement at all levels of operations and
with senior leadership teams, combined with activities
focused on identifying and eliminating drivers of health
and safety incidents, has delivered significant successes
and resulted in a sustained reduction in the severity
of injuries.
OZ Minerals is continuing to build partnerships with
local and state Governments and other miners operating
in the regions it operates, to support projects that
contribute to improving employee and community safety.
Threat
OZ Minerals undertakes operations in areas that may
pose health and safety risks including, but not limited to,
handling explosives; underground operations subject to
rockfall; infrastructure, tailings facilities, extreme weather
events, endangered flora or fauna, areas of cultural
heritage significance, confined spaces; areas where
heavy and light vehicles interact; manual handling;
and operating at heights.
A fly-in fly-out operation also introduces risk that is
inherent in air travel, as contractors and employees
are regularly required to commute by aircraft. Similarly,
drive-in and drive-out operations introduce inherent
safety travel risks to employees and contractors.
Health and safety incidents may lead to serious injuries,
loss of life to employees, contractors and members of
the community. Also, incidents may result in reputational
damage, loss of license to operate, disruption to operations,
increased costs or environmental damage.
Opportunity
Consistently exceeding or meeting our health and safety
commitments can enhance the Company’s reputation
and working relations across all key stakeholders and
contributes to sustainable growth.
This can also enable the Company to gain a competitive
advantage on minerals resources, funding, and a skilled
workforce to sustain the Company’s growth strategy.
Mine closure and rehabilitation
The Company operates under a range of
environmental regulations and guidelines,
including rehabilitation of disturbed areas
that are no longer required for operational
purposes (closed mines).
Determining the closure and rehabilitation
provisions is a complex area requiring
significant judgment and estimates,
particularly given the timing and quantum
of future costs, the unique nature of each
mine site, and the long timescales involved.
2019 Risk Trend Analysis
No Change in Risk
There are no changes identified for these
risks that are expected to significantly
increase OZ Minerals’ level of exposure.
Threat
The Company is required to close its operations and
rehabilitate the land affected by the operation at the
conclusion of mining and processing activities.
However, actual closure costs may be higher or lower
than estimated as these are costs to be incurred following
the closure of mining operations over a long time.
Opportunity
Excellent performance on mine closure, rehabilitation
and legacy management of closed sites can enhance
OZ Minerals’ reputation and enable the Company to gain
and maintain access to land, resources, skilled work force
and external funding, so the Company can continue to
pursue its growth strategy and establish new projects
with the support of local communities and other key
stakeholders.
Estimates of mine closure costs are reflected in
accordance with AASB 137 Provisions, Contingent
Liabilities, and Contingent Assets as provisions in
the financial statements.
Management seeks external assistance and review,
where appropriate, to estimate these costs.
OZ Minerals complies with the South Australian
Government’s Program of Environmental Protection
and Rehabilitation (PEPR) to address mine closure
requirements in line with the Department of Energy
and Mining regulations. In Brazil, the Company complies
with the National Mining Agency, and the Environmental
Agency of Para State (SEMAS) regulations to address
mine closure requirements.
OZ Minerals maintains a strong and effective operational
monitoring program including groundwater, cultural
heritage sites and flora and fauna habitats.
OZ MINERALS
47
Context
Risk
Mitigation/actions
Threat
OZ Minerals’ environmental performance and management
of environmental impacts on the communities in which it
operates is critical to creating sustainable social value.
Non-compliance with environmental regulation has the
potential to impact Company growth, damage reputation,
and could result in damaged relationships with key
stakeholders and loss of licences to operate.
Opportunity
Effective environmental-related risk management
can contribute to long term business, social, and
environmental benefits, including long term business
resilience, improved community relations, reputational
benefits, and maintenance of operating licences.
Threat
OZ Minerals or its partners may engage in activities
that impact the environment, communities, human
rights, or social wellbeing.
This can affect OZ Minerals’ relationships with or
be viewed negatively by the community and other
stakeholders. A loss of stakeholder support could result
in the inability to maintain good relationships, loss
of social license or permit to operate, loss of business
opportunity, land tenure or significant delay in project
approval or delivery.
Opportunity
Superior social performance allows the Company to
gain and sustain land access and enables the Company
to develop new projects and deliver its growth strategy
to the benefit of all key stakeholders.
Managing and Protecting
the Environment
There is growing pressure on and
competition for environmental resources,
such as biodiversity, water, and air. Our
operations and growth Strategy depend
on obtaining and maintaining the right
to access these environmental resources.
OZ Minerals is committed to managing
environmental threats and impacts
associated with specific activities or tasks
and to identify opportunities that have the
potential to drive value creation for both
OZ Minerals and the communities in
which it operates.
2019 Risk Trend Analysis
No Change in Risk
OZ Minerals’ exposure to environmental
risks is expected to remain relatively stable.
Maintenance of community
relations and good title
OZ Minerals is committed to high
standards of stakeholder engagement
and social performance by its employees
and contractors.
Building and maintaining strong supportive
relationships and partnerships with host
communities in the areas where it operates
drives value creation for both the business
and communities.
The Company seeks to deliver long-term
benefits to local communities and other
stakeholders by engaging and collaborating
with local communities, understanding the
social impacts its, and reducing the adverse
effects of its activities.
2019 Risk Trend Analysis
Increasing Risk
OZ Minerals’ exposure to community
and its license to operate is assessed as
increasing due to societal and political
requirements generally as well as
expectations for managing exposures
in the Gurupi Province in Brazil.
The OZ Minerals Risk Management Process Standard
outlines the process of risk identification, assessment,
management, and reporting across all operations
including the requirement to take a risk-based approach
to environmental management.
Environmental risks for OZ Minerals’ operations are
addressed by adhering to the conditions set out within
the Performance Standards and legislative and regulatory
requirements of the jurisdictions in which they operate.
The Performance Standard conditions set out to address
areas such as surface water, groundwater, flora and
fauna, radiation, air emissions, land and biodiversity,
roads, traffic and other infrastructure, and Indigenous
and non-Indigenous cultural heritage.
Each operation has monitoring programs to ensure
it meets the legislative, regulatory and other
environmental requirements.
The performance of each OZ Minerals operation is
independently reviewed and reported against according
to the conditions of relevant jurisdiction each year.
The Company has a Social Performance Standards
which sets out the minimum standards assets are
required to meet.
Local level access, compensation and benefit
agreements are in place with land connected and
Indigenous stakeholders affected by exploration and
operational mining activities. Local level agreements
are developed in collaboration with stakeholders
to demonstrate Free, Prior and Informed Consent.
Agreements are updated as required.
The Company has controls in place to ensure compliance
with the Prominent Hill deed covering the Woomera
Prohibited Area and local level agreements. It relies on
good relations with the Australian Defence Department
regarding defence operations in the Woomera region
and any potential impact these may have on our mining
operations.
The Company also relies on the maintenance of good
title over the authorisations, permits and licenses which
allow it to operate.
Legal processes are being followed to facilitate the lifting
of a legal injunction across the CentroGold project in
Brazil, although there is no certainty as to the timing
of remedies. The Company retains good relations with
the local community.
In the Carajás province, OZ Minerals works in partnership
with stakeholders including the different municipalities
where its project is located, in support of the local
communities.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 48
DIRECTORS' REPORT
Context
People and Culture
Attracting and Retaining Talent
OZ Minerals’ competitive advantage lies in
its agile and innovative culture. Attracting
and retaining great people with the right
skills and behaviours both now and for
the future is core to our success.
2019 Risk Trend Analysis
No Change in Risk
OZ Minerals’ exposure to this risk is
relatively stable during FY 2019 and there
are no indicators identified that are expected
to significantly increase OZ Minerals’ level
of exposure at this time.
Human rights and ethics
Human rights and ethics
OZ Minerals’ activities are exposed to
human rights, ethics, and social well-being
expectations. Our operations and supply
chain are subject to human rights, ethics,
and employment conditions, which may
vary from time to time.
The Company recognises the potential for
human rights exposures and risks in all
jurisdictions and is committed to working
broadly to promote respect through
stakeholder engagement, collaboration,
advocacy, and contribution to public
policy development.
2019 Risk Trend Analysis
Increasing Risk
OZ Minerals’ level of exposure to risks
associated with human rights and ethics
requirements has been assessed as
increasing due to increasing community and
political requirements and expectations, as
well as its expansion into new jurisdictions.
Regulatory and Legislation
Compliance, regulatory and legislation
OZ Minerals’ regulatory and social licence
are dependent upon complying with laws,
regulations, guidelines and recommendations
including in relation to anti-bribery and
corruption, taxation, data privacy, land
access, native title, health, safety and
environment, human rights, modern
slavery, and local regulations or standards.
2019 Risk Trend Analysis
No Change in Risk
There are no changes identified that
are expected to significantly increase
OZ Minerals’ exposure, except for
climate change and human rights.
Risk
Mitigation/actions
Threat
The inability to attract or retain key talent would
constrain the Company’s ability to deliver its Business
Plan and Strategy.
Opportunity
Leveraging a powerful and purpose-driven employee value
proposition to attract and retain a diverse, inclusive, and
engaged workforce will deliver a competitive advantage to
the Company, enable it to deliver its growth Strategy, and
add value to all stakeholders.
Threat
OZ Minerals’ operations or its partners’ may engage in
activities that may be perceived to or actually impact
human rights or social wellbeing.
This can affect OZ Minerals’ relationships and reputation
with all key stakeholders. A loss of key stakeholder support
could result in an inability to access new resources, loss
of new business opportunity, loss of licenses, permit or
approval, delays in project approvals, shareholder activism,
society activism, or litigation.
Opportunity
OZ Minerals’ operations or its partners’ activities
have the potential to improve the lives of stakeholders
and host communities. Application of local enterprise,
partnering-based local level agreements and health and
wellbeing programs have the potential to contribute
to the development of host communities and to
improvement in key education, health and wellbeing
performance indicators.
OZ Minerals mitigates this threat and leverages this
opportunity through the following core People priorities:
/ A strong and purpose-driven Employee Value
Proposition to attract and retain the best.
/ An inclusive culture that enables both demographic
and cognitive diversity and the innovation that comes
with it.
/ Modern, flexible working arrangements that reflect
the future nature of work and promote wellbeing.
/ Agile performance management processes that
promote a culture of continuous development.
/ Professional and leadership development to enable
our people to do the best work of their careers.
/ Regular employee engagement pulse checks and
an ongoing focus on culture.
/ A strategic workforce planning approach across all
operations to identify and manage current and future
workforce requirements.
Maintain an up to date human rights and modern
slavery training and awareness program across all
business areas.
OZ Minerals’ employees, contractors, and partners in
all geographies are required to operate in compliance
with the Company’s How We Work Together Principles,
Policies, Process and Performance Standards and its
Code of Conduct.
Independent review of operations’ compliance with
OZ Minerals’ Performance Standards and Company
Policies that encompass working in a manner that is
consistent with the following, to provide minimum
requirements and expectations to comply with
relevant laws:
/ the Universal Declaration of Human Rights
/ obligations of corporations set out in the UN
Guiding Principles on Business and Human Rights
/ UN Voluntary Principles on Security and Human Rights.
OZ Minerals continues to improve its understanding
and management of Modern Slavery related risks in
its operations and supply chain.
Threat
The Company’s activities or those of our partners could
result in actual or perceived breaches of legal, regulatory,
ethics or compliance obligations.
Non-compliance with laws and regulations could lead to
fines and penalties imposed against the Company, delay
on projects, loss in share price value, loss of land tenure,
or loss of social licence to operate, permits or approvals.
Other impacts could include damage to Company
reputation from all key stakeholders.
Opportunity
Complying with laws and regulations and maintaining
a high ethical and social performance standard enables
OZ Minerals to gain and maintain access to resources,
expand provinces, investment opportunities and create
value for key stakeholders.
OZ Minerals employees, contractors, and partners
operate in compliance with the HWWT principles,
Policies, Global Process and Performance Standards.
The governance framework provides minimum
requirements to comply with relevant laws and
legislations.
OZ Minerals continues to improve its understanding
and management of modern slavery related risks in its
operations and supply chain and to identify associated
opportunities by maintaining up to date modern slavery,
anti-bribery and corruption, continuous disclosure and
code of conduct training and awareness.
Continue to track and monitor key changes to legislation
and regulations and respond to new requirements.
OZ MINERALS Remuneration
Overview
and Report
50
REMUNERATION O VERVIEW
Letter from the
Chairman of the People
and Remuneration committee
Dear Shareholders,
On behalf of the Board of Directors, I am pleased to provide you with the 2019 Remuneration
Report for OZ Minerals.
2019 was another year of strong performance for the Company, including:
/ Construction and delivery of the Carrapateena mine, which will ramp up to full production over
the next 12 months.
/ Continued reliable performance at the Prominent Hill mine where a significant existing resource
supported a further mine life extension to 2031 and an expansion study which is underway.
/ Development of the Carajás Hub strategy in Brazil with construction starting in December 2020
of the Pedra Branca underground mine which will become the first spoke in the Carajás
processing hub.
/ The consolidation and embedding of our culture and governance processes.
/ A strong NPAT result of $163.9 million.
Shareholders benefited from the Company’s performance with dividends of 23 cents per share
and annual shareprice growth of 20%.
The success of the Company during the year was a direct result of the talent, hard work and
dedication of the Company’s employees and stakeholders. More detail on the Company’s
performance is contained in the Directors’ Report.
Remuneration outcomes in 2019
As in previous years, we continued to ensure that remuneration outcomes reflect the performance
of the Company and were aligned to Shareholders’ expectations.
Key outcomes for 2019
/ Executive salaries were increased as detailed in last year’s report.
/ In March of 2019 we were saddened and confronted by a fatal incident involving an ElectraNet
sub-contractor who was a helicopter pilot working on stringing the power line to our Carrapateena
project. His death has had a profound effect on the whole Company, especially the Carrapateena
team. To acknowledge this tragedy, and pay our respects, the Board with the full support of the
Management Team has chosen to rate the safety component of the 2019 STI plan at 0% payment.
/ The strong performance of the Company against the remaining KPIs set by the Board for the 2019
year resulted in a score of 3.4 out of 5.0. Details of the KPI outcomes can be found in Section 3.2
of the Remuneration Report.
/ Recognising the strong Company performance and his leadership during 2019, the Board awarded
70% of the maximum annual short term incentive opportunity to the Managing Director and
Chief Executive Officer, Andrew Cole. The Company score and achievement of individual stretch
goals supported short term incentive awards to Warrick Ranson and Mark Irwin of 81% and 75%
respectively, of their maximum annual short term incentive (STI) opportunity. 30% of STI awards
will be paid in performance rights vesting after two years. Details of STI outcomes can be found
in Section 3.2 of the Remuneration Report.
/ The 2017 long term incentive (LTI) plan vested at 100% in December 2019 following a strong
relative performance of the Company and strong share price performance. This resulted in the
vesting of 135,446 performance rights to Andrew Cole.
/ The performance conditions of the 2018 KMP Alignment Plan were satisfied in December 2019
resulting in the vesting at 100% of 11,400 performance rights to Warrick Ranson and 11,400
performance rights to Mark Irwin.
OZ MINERALS 51
Remuneration changes implemented in 2019
As communicated in last year’s Remuneration Report, 2019 saw the implementation of changes to
our Remuneration Framework to create a greater alignment between executives and shareholders
over the longer term.
In summary, the key changes implemented were:
/ 30% of an executive’s STI is now paid in equity subject to a two-year holding lock.
/ All-in Sustaining Costs (AISC performance) has replaced the absolute share price performance
measure for the LTI plan.
/ A two-year holding lock on equity which vests under future LTI plans has been introduced.
/ The scope of malus and claw-back provisions were broadened to include circumstances that
bring the Company into disrepute, or any catastrophic environmental or safety incident.
/ Introducing a requirement for executives and Non-executive Directors to acquire shares in the
Company equal to 100% of base fee for Non-executive Directors, 100% of fixed remuneration
for the CEO and 50% for KMPs and other senior executives. Progress against these five year
targets can be seen in Section 2.5.5 and 6.3 of the Remuneration Report.
Over the course of 2019 we also conducted a comprehensive market benchmarking exercise in
Brazil in order to align the Brazilian business with the OZ Minerals Remuneration Framework in
the context of local market conditions.
Remuneration changes anticipated in 2020
The changes outlined above have had the intended effect of strengthening alignment between
executives and shareholders and no changes are proposed for our Remuneration Framework in 2020.
Following a benchmarking review of executive salaries against our stated remuneration positioning
(median for fixed remuneration and upper quartile for performance against value creation stretch
goals) we are comfortable that the 2019 adjustments for Warrick Ranson and Mark Irwin were at the
right level. Their Remuneration will be subject to the Company wide remuneration review for 2020.
Noting that the benchmarking review indicated that the fixed remuneration of the CEO, Andrew
Cole, was below the median, the Board has resolved to increase his fixed remuneration from
$850,000 to $900,000 per annum reflecting market conditions and the increases in the scale and
complexity of the Company.
Following the 5% adjustment to Non-executive Director fees in September 2018, Director fees will be
held at their current levels for 2020. We will benchmark Directors’ fees in 2020 with any changes to
take effect in 2021. Details of Directors’ fees can be found in Section 6 of the Remuneration Report.
The LTI plan total shareholder return (TSR) comparator group is reviewed annually to ensure the
group best reflects the changing nature of the Company’s operations. For the 2020 LTI plan four
companies (Capstone Mining, Western Areas, Dundee Precious Metals and Metals X Limited) will be
removed from the comparator group and replaced with five companies (Jiangxi Copper Company,
KGHM Polska, Zijin Mining Group, Ero Copper Corp and Boliden AB) taking the total comparator
group to 15.
In a year of strong performance the Board believes the 2019 remuneration outcomes demonstrate
alignment with shareholder outcomes. The Board remains committed to a Remuneration Framework
that develops a culture aligned with the Company’s Value Creation Policies, is performance based,
supports the Company’s strategic objectives and long-term financial soundness and motivates
executives to pursue the long-term growth of the Company.
Thank you for your ongoing support of OZ Minerals.
Tonianne Dwyer
Chairman
People & Remuneration Committee,
Adelaide
18 February 2020
Note: Letter from the Chairman of People and Remuneration Committee is unaudited.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 52
REMUNERATION O VERVIEW
OZ MINERALS 53
Remuneration overview
Remuneration to executive key management personnel in 2019
Full details of the audited cost to the Company of executive key management personnel (KMP)
remuneration, calculated in accordance with the accounting standards and the Corporations
Act 2001, are available in Table 12 of the Remuneration Report (page 67).
The table below (unaudited) which includes details of remuneration actually delivered to
executive KMP in 2019, has been prepared to be transparent with our shareholders regarding
remuneration outcomes.
Actual remuneration to executive key management personnel
Cash salary
$
Paid short term
incentives(a)
$
Vesting long term
incentives(b)
$
Contributed
superannuation(c)
$
Total
remuneration
$
Current
Andrew Cole
Managing
Director and CEO
Warrick Ranson
Chief Financial
Officer
Mark Irwin
Chief Commercial Officer
2019
2018
2019
2018
2019
2018
829,233
779,710
544,233
504,710
501,002
464,062
621,688
801,600
318,378
350,700
284,830
324,585
1,453,605
3,012,017
122,345
–
122,345
–
20,767
20,290
20,767
20,290
20,767
2,925,293
4,613,617
1,005,723
875,700
928,944
20,290
808,937
(a) This amount represents 70% of total STI which was paid in cash for 2019. In addition 30% of total STI will be granted in performance rights, which vest after
2 years provided certain conditions are satisfied (refer Section 3.2). 25,327 performance rights will be awarded to Andrew Cole, 12,970 to Warrick Ranson and
11,604 to Mark Irwin.
(b) The value of the long term incentives which vested during the year is calculated by multiplying the number of performance rights vested by the VWAP over
the period 2 December to 31 December 2019. On 31st December 2019, the 2017 LTI plan vested resulting in the award of 135,446 shares to Andrew Cole
(see Section 3.3) and the 2018 Alignment Plan vested resulting in the award of 11,400 shares to each of Warrick Ranson and Mark Irwin. Two equity plans
vested for Andrew Cole in 2018.
(c) Represents direct contributions to superannuation funds based on quarterly contribution limits under Super Guarantee Charge regulations. Amounts greater
than the maximum superannuation level have been included in cash salary.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 54
REMUNERATION O VERVIEW
Remuneration report
The Directors of OZ Minerals Limited present the Remuneration Report for the Company and the
Consolidated Entity for the year ended 31 December 2019. This Remuneration Report forms part
of the Directors’ Report and has been audited in accordance with the Corporations Act 2001.
1.0 Key management personnel
The Consolidated Entity’s key management personnel (KMP) during 2019 are listed in Table 1 and
consist of the Non-executive Directors (NED) and executive KMP who are accountable for planning,
directing and controlling the affairs of the Company and its controlled entities.
Table 1 – KMP during 2019
Executive KMP
Andrew Cole
Warrick Ranson
Mark Irwin
Non-executive Directors
Charlie Sartain
Peter Wasow
Richard Seville
Tonianne Dwyer
Former
Marcelo Bastos
Position
Period as KMP during the year
Managing Director and CEO
All of 2019
Chief Financial Officer
Chief Commercial Officer
Independent NED
Independent NED
Independent NED
Independent NED
All of 2019
All of 2019
All of 2019
All of 2019
All of 2019
Appointed on 1 November 2019
All of 2019
Independent NED
Resigned 5 April 2019
Rebecca McGrath
Independent Chairman
OZ MINERALS 55
2.0 Remuneration Strategy
2.1 Remuneration Philosophy
OZ Minerals seeks to attract and retain high performing executives and incentivise them to
outperform. Our approach to remuneration is to provide executives with a market competitive fixed
remuneration and to reward out performance through performance-linked, ‘at risk’ remuneration.
Accordingly, we seek to position the fixed remuneration of our executives at around the market
median of relevant benchmarks, with the opportunity to earn upper quartile total remuneration
for delivering outperformance.
2.2 Remuneration Principles
The remuneration principles (Table 2) demonstrate the links between remuneration and business
strategies and their impact on OZ Minerals’ actual remuneration arrangements. The overriding
business objective is to build value for all our stakeholders with ‘Creating Shared Value’ at the
heart of the OZ Minerals Strategy.
Table 2 – Remuneration Principles
Business needs and
market alignment
Simplicity and equity
Performance and
reward linkages
Market positioning
and remuneration mix
OZ Minerals’ remuneration framework is focused on achieving our corporate objectives.
Remuneration is set with regard to market practices and structured so that outcomes
are aligned with shareholder returns.
OZ Minerals’ remuneration philosophy, principles and framework are simple to understand,
communicate and implement, and are equitable across the Company and its diverse
workforce.
A well-designed remuneration framework supports and drives Company and team
performance and encourages the demonstration of desired behaviours. Performance
measures and targets are few in number, outcome-focused and customised at an
individual level to maximise performance, accountability and reward linkages.
Fixed remuneration is set at a competitive level and positioned to take into account the
challenges of attracting and retaining high performers in business critical roles, particularly
in the mining industry. The ‘at-risk’ components of remuneration are based on challenging
goals designed to incentivise executive KMP to achieve business critical objectives
and create stakeholder value including shareholder returns. A substantial portion of
remuneration is paid in equity and ‘locked in’ to encourage focus on long term outcomes.
Talent management
Remuneration framework is tightly linked with our performance and talent management
frameworks to reward and recognise employees who achieve their role accountabilities
and to engage future leaders.
Governance, transparency
and communication with
shareholders
OZ Minerals is committed to developing and maintaining remuneration practices that
promote the creation of shared value for stakeholders. We openly communicate these
practices to shareholders and other relevant stakeholders, and will always be within
legal, regulatory and industry requirements. The Board has absolute discretion to develop,
implement and review all aspects of remuneration.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 56
REMUNERATION O VERVIEW
2.3 Remuneration Framework
The OZ Minerals Remuneration Framework aims to attract great people to deliver the OZ Minerals
Strategy by offering a balanced approach between fixed and variable (at-risk) pay that incentivises
both short-term and long-term performance.
Element
Structure
Total Fixed Remuneration
(TFR)
Base cash salary
and superannuation.
Performance
Measures
Link to delivery of
corporate strategy
Total Fixed Remuneration is
determined based on factors
including external market
benchmarking, relativity
to peers and individual
performance.
Short Term Incentive (STI)
Mix of 70% cash and 30%
performance rights, with a
two-year vesting period.
STI is determined based
on performance against
challenging, clearly defined
and measurable targets.
Long Term Incentive (LTI)
Performance rights
with a three-year
vesting period subject to
an additional two-year
holding lock period.
LTI is assessed against the
TSR 70% and AISC 30%.
Minimum Shareholding
Requirements (MSR)
All executives and senior management are expected to
accumulate and hold a minimum level of vested shares in
OZ Minerals over a reasonable period. There are different
shareholding requirements for each level of management,
which are expressed as a percentage of their Total Fixed
Remuneration.
Fixed remuneration is set
at a competitive level and
positioned at market median
to take into account the
challenges of attracting and
retaining high performers in
business critical roles.
The short term “at-risk”
component of remuneration
is focused on incentivising
executive Leadership to
achieve business critical
objectives and demonstrate
OZ Minerals desired ways
of working.
The long term “at-risk”
component of remuneration
rewards the delivery of
shareholder returns and
a sustainable business
whilst encouraging decision
making aligned to long term
shareholder value creation.
This requirement increases
the sense of ownership of
the Company amongst our
executives and enhances the
degree to which our reward
arrangements align the
interests of our executives
with that of our shareholders.
2.4 Review of executive KMP remuneration
Executive KMP remuneration levels are reviewed annually by the Board with help from the People &
Remuneration Committee and external remuneration consultants, as required. The review ensures
that executive KMP remuneration remains consistent with the Company’s remuneration framework
and guiding principles, and considers:
/ The Company’s remuneration philosophy
/ relevant market benchmarks using salary survey data from the Australian and Brazilian industrial
and resources sectors
/ the skills and experience required of each role in order to grade positions accurately and attract
high calibre people
/ individual performance against role expectation, set objectives, leadership behaviors and
development plans
/ Company strategy, business plans and budgets.
OZ MINERALS 57
2.5 Executive KMP remuneration components
2.5.1 Remuneration mix
The mix of fixed and at-risk remuneration varies depending on the role and grading of executives
as well as the performance of the Company and individual executives. More senior positions have
a greater proportion of at-risk remuneration. If ‘at target’ and ‘at maximum’ at-risk remuneration is
earned, the ratios of fixed to at-risk remuneration for KMP would be as follows.
2019 executive KMP remuneration mix(a)
Mix at target:
Managing Director and CEO
Chief Financial Officer
Chief Commercial Officer
Mix at maximum:
Managing Director and CEO
Chief Financial Officer
Chief Commercial Officer
28%
38%
38%
24%
34%
34%
Fixed
STI
LTI
(a) Service and performance conditions apply to STI and LTI.
2.5.2 Total fixed remuneration (TFR)
30%
27%
27%
38%
34%
34%
42%
35%
35%
38%
32%
32%
What is included in total
fixed remuneration?
When and how is fixed
remuneration reviewed?
An executive KMP’s total fixed remuneration comprises salary and certain other benefits
(including statutory superannuation contributions) that may be taken in an agreed form,
such as cash, leased motor vehicles and additional superannuation, provided that no extra
cost is incurred by the Company for these benefits.
Fixed remuneration is reviewed annually. Any adjustments to the fixed remuneration for
the Managing Director and CEO and other executive KMP must be approved by the Board
after recommendations from the People & Remuneration Committee. During the year,
we updated the market benchmarking of executive remuneration conducted last year,
mindful of the need to continue to retain our key employees in a competitive market as
the Company grows. The benchmarking demonstrated that our fixed remuneration was,
in most cases, in line with our preferred positioning, toward 50th percentile.
Changes from last year?
No changes to our approach to fixed remuneration are proposed for 2020. We will
continue to review our executive remuneration levels annually to ensure pay levels
remain competitive to attract, motivate and retain the best talent for OZ Minerals.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 58
REMUNERATION O VERVIEW
2.5.3 Short term incentive (STI)
Why does the Board think an STI plan is
appropriate?
What are the performance conditions?
Variable performance-based remuneration strengthens the link between pay and performance. The purpose of this plan
is to make a large proportion of the total reward package subject to meeting various targets linked to OZ Minerals’ business
objectives. The use of variable performance-based remuneration avoids much higher levels of fixed remuneration and is
designed to focus and motivate employees to achieve outcomes which deliver the Company’s Strategy. A reward structure that
provides variable performance-based remuneration is also a necessary component of a competitive remuneration package in
the Australian and global marketplace for executives.
The performance conditions that determined STI outcomes in 2019 were: (a) Company key performance indicators (KPIs),
(b) Individual KPIs and (c) How We Work Together principles (HWWT).
The Company KPIs in 2019 determined 80% of the STI award for the Managing Director and CEO with individual KPIs
determining the balance of 20%. The Company KPIs determined 50% of the STI award for the remaining KMPs with the
balance determined by attainment of individual KPIs (25%) and the demonstration of behaviors exemplifying the HWWT
principles (25%).
CEO KPIs
CFO &
CCO KPIs
Company KPIs
Individual KPIs
HWWT
(a) Company KPIs
Company KPIs are set and weighted at the beginning of each year. They are designed to drive successful and sustainable
financial and business outcomes, with reference to the Board approved corporate objectives, plans and budget for the year.
The key areas of focus in 2019 included improving the Company’s operational and financial performance, sustainability
performance and progressing strategic growth objectives. Further details of the 2019 performance against the KPIs can be
found in Section 3.2.
Table 3.1 – Company KPIs in 2019 that applied to executive KMP
KPI category
KPI examples
% weighting
Operational and financial
EBITDA, net cash flow, Carrapateena delivery,
corporate efficiency, capital management
Strategy and growth
Concentrate production and sales, organic growth,
Brazil strategy, exploration pipeline, governance
Sustainability
Safety improvement, culture, leadership effectiveness
40
40
20
b) Individual KPIs
Individual KPIs vary for each executive KMP based on their accountabilities.
The Board assesses and sets the KPIs for the Managing Director and Chief Executive Officer, and the Managing Director and
Chief Executive Officer assesses and sets the KPIs for each of the other executive KMP in consultation with the Board.
Table 3.2 – Individual KPIs in 2019 that applied to CEO and Managing Director
KPI category
KPI examples
% weighting
Lean and Innovative
Deliver plan and budget
How We Work Together
Build and strengthen team, develop leaders, embed culture and HWWT
Devolved and Agile
Implement Risk Management, Performance & Process Standards
25
50
25
OZ MINERALS 59
What are the performance conditions?
(cont’d)
Table 3.3 – Individual KPIs in 2019 that applied to CFO
KPI category
KPI examples
% weighting
Operational and financial
EBITDA, strategic procurement, funding strategies
Strategy and growth
Governance, planning, strategy and sales
Sustainability
Culture, leadership effectiveness, risk and assurance
30
40
30
Table 3.4 – Individual KPIs in 2019 that applied to CCO
KPI category
KPI examples
% weighting
Operational and financial
EBITDA
Strategy and growth
Growth portfolio, governance, M&A
Sustainability
Project delivery, culture, leadership effectiveness
25
45
30
c) HWWT
The How We Work Together principles are the same for all executive KMP and they are based on the following elements:
/ Thinking and acting differently,
/ Building a culture of respect that enables our people to succeed,
/ Focusing on partnerships and collaboration, not hierarchy,
/ Delivering superior results through effective planning and agile deployment,
/ Doing what we say we will do and taking action,
/ Acting with integrity and engaging with our stakeholders
Is there an overriding financial
performance condition or other condition?
Yes. The availability of the STI pool is at the discretion of the Board, which takes into account the interests of the
Company and shareholders. The Board can choose not to pay or reduce the amount of the STI otherwise payable.
How is the STI structured to reward
exceptional performance?
The STI plan is designed to reward executive KMP at any point in between threshold and maximum performance levels.
Threshold performance represents the minimum level of performance required for an STI award to be paid.
Target performance
represents the achievement of planned or budgeted performance, set at a challenging level.
Maximum performance represents outstanding performance, set at a stretch level.
What is the value of the STI opportunity?
Table 3.5 – The target and maximum STI reward opportunity for executive KMP in 2019
How is STI assessed?
Executive KMP
Andrew Cole
Warrick Ranson
Mark Irwin
STI at target
as % of TFR
Maximum STI
as % of TFR
STI at target
Value $
Maximum STI
Value $
105
70
70
150
100
100
892,500
395,500
381,500
1,275,000
565,000
545,000
The Managing Director and CEO assesses the performance of each executive KMP throughout the year for achievement
against their personal performance targets and objectives, to arrive at a summary assessment at year end for discussion
with the People & Remuneration Committee and the Board. The Board also reviews the performance assessment of all other
executives who report directly to the Managing Director and CEO, with a view to understanding, endorsing and/or discussing
individual circumstances, performance, leadership behaviours and future development. The People & Remuneration Committee
and the Board assess the performance of the Managing Director and CEO against the performance targets and objectives set
for that year.
The Board considers the method of assessing STI as described above to be appropriate as the Managing Director and CEO has
oversight of his direct reports and the day-to-day functioning of the Company, whilst the Board and People & Remuneration
Committee have overall responsibility for determining whether executive KMP have met the performance targets and
objectives set for that year.
What happens to STI awards when
an executive ceases employment?
If an executive leaves OZ Minerals then the Good Leaver rules may apply (subject to the executive’s contract) and,
if the requirements are met, the STI may be granted on a pro rata basis in relation to the period of service completed.
If an executive leaves as a good leaver, performance rights on foot but unvested remain on foot to vest in the normal
course. This is at the Board’s discretion and conditional upon the individual performance of the relevant executive.
Have the arrangements changed from
last year?
Yes. As communicated in last year’s remuneration report, with effect from 2019, 30% of the STI is now awarded in
performance rights which vest, subject to fulfillment of conditions, two years after award.
Maximum STI opportunities were also increased for the Managing Director and CEO from 120% to 150% of fixed
remuneration and for other KMP from 80% to 100%.
Claw back will now also apply to the STI component that is delivered as performance rights and now the Board has greater
flexibility to claw back awards or shares. For example, the Board may lapse or forfeit awards granted under the STI or LTI plans
in the event that there is a significant safety or environmental event.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 60
REMUNERATION O VERVIEW
2.5.4 Long term incentive (LTI)
Why does the Board consider
an LTI plan to be appropriate?
The Company believes that a LTI plan can:
/ focus and motivate employees to achieve longer term outperformance outcomes
/ ensure that business decisions and strategic planning take into account the Company’s long term performance
/ be consistent with contemporary remuneration governance standards and guidelines
/ be consistent and competitive with current practices of comparable companies
/ create an immediate ownership mindset among the executive participants, aligning them with shareholders
by linking a substantial portion of their potential total reward to OZ Minerals’ shareholder returns.
How is the award delivered?
The LTI is granted using performance rights under the OZ Minerals LTI Plan (detailed below).
Was a grant made in 2019?
A grant was made on 29 May 2019 to all continuing participants in the LTI plan, including the Managing Director and
CEO. Using a face value approach the number of performance rights granted to each executive was calculated as their
LTI dollar opportunity divided by the adjusted twenty-day volume weighted average price of OZ Minerals as at the start
of the performance period. The performance period for the 2019 LTI grant is 1 January 2019 to 31 December 2021.
What was the value of the 2019
grant for executive KMP?
Table 3.6 – The LTI grant to executive KMP in 2019
What are the performance conditions?
Executive KMP
Andrew Cole
Warrick Ranson
Mark Irwin
2019 LTI grant
as % of TFR
2019 LTI grant allocation
value $
2019 LTI grant
number of rights
150
90
90
1,275,000
508,500
490,500
138,270
55,145
53,193
The two performance conditions, referred to as the vesting conditions are: (a) OZ Minerals meeting the LTI performance
conditions; and (b) the executive KMP meeting the service condition.
Performance conditions
The LTI plan performance conditions for 2019 are different from 2018 and are as follows:
1. Total shareholder return (TSR)
Relative TSR is the primary LTI performance hurdle measured against a comparator group. The Board considers TSR to be an
appropriate performance measure because it ensures that a proportion of each participant’s remuneration is linked to Value
Creation and that participants only receive a benefit where there is a corresponding direct benefit to our shareholders,
as reflected in the share price.
TSR reflects benefits received by shareholders through share price growth and dividend yield and it is the most widely used
long term incentive measure in Australia. The Company employs an independent organisation to calculate the TSR ranking
to ensure an objective assessment of the relative TSR comparison. Performance rights in respect to this hurdle will vest in
accordance with the following table.
Table 3.7 – Performance rights vesting according to total shareholder return
TSR of OZ Minerals relative to TSRs
of constituents of the nominated peer group
Proportion of performance rights that vest
Below 50th percentile
50th percentile
Nil
50%
Between 50th percentile and 75th percentile
Straight line vesting between 50% and 100%
75th percentile or above
100%
The TSR performance hurdle accounts for 70% of the LTI award. Grants in 2018 and 2017
were subject to the same conditions set out in the table above.
2. All-In Sustaining Costs (AISC)
AISC is an industry accepted measure of the total operating cost of producing a unit of metal.
Comparative data will be sourced from Wood Mackenzie’s global copper mine supply summary report, available through
its database. The annual AISC performance will be recalculated across the full three-year period (total 3-year absolute costs
divided by total 3-year copper metal production). The comparison will be to the average published TCPS (Total Cash Cost
+ Sustaining Capex) across that same period.
OZ MINERALS 61
What are the performance conditions?
(cont’d)
Performance in relation to this hurdle will be measured over the 3 year performance period and will vest in accordance
with the following table.
Why were the performance
conditions chosen?
What is the comparator group?
Table 3.8 – Performance rights vesting according to all-in sustaining costs
TSR of OZ Minerals AISC over the performance period
Proportion of performance rights that vest
Above 50th percentile
50th percentile
Nil
50%
Between 50th percentile and 25th percentile (Lowest cost)
Straight line vesting between 50% and 100%
25th percentile or below
100%
The all-in sustaining costs hurdle accounts for 30% of the LTI award. Prior to 2019 30% of the LTI award was subject to
absolute share price growth over the performance period. Growth of 20% or greater results in 100% vesting. Less than 20%
no rights will vest.
Service condition
The service condition is met if employment with OZ Minerals is continuous for three years commencing at the beginning
of the performance period.
It is standard market practice to link individual executive performance (including mandatory service periods) and Company
performance to the vesting of performance rights. The conditions link executives’ retention and performance directly to
rewards, but only where shareholder returns are realised. The focus on employee-held equity is also part of a deliberate policy
to strengthen engagement and direct personal interest to achieve shareholders returns.
The comparator companies selected for the 2019 LTI plan are considered to be alternative investment vehicles for local and
global investors. They are impacted by commodity prices and cyclical factors in a similar way to OZ Minerals. The Comparator
group is reviewed annually for market changes.
Table 3.9 – 2019 comparator companies
Comparator company
Capstone Mining Corp.
HudBay Minerals Inc.
KAZ Minerals Plc
Lundin Mining Corporation
Sandfire Resources NL
Taseko Mines Limited
Independence Group
Western Areas
Dundee Precious Metals
First Quantum Minerals
Antofagasta Plc
Freeport McMoran
Metals X Limited
Central Asia Metals Plc
Exchange
ASX/ticker code
TSX
TSX
LSE
TSX
ASX
TSX
ASX
ASX
TSX
TSX
LSE
NYSE
ASX
AIM
CS
HBM
KAZ
LUN
SFR
TKO
IGO
WSA
DPM
FM
ANTO
FCX
MLX
CAML
What happens to performance rights
granted under the LTI plan when an
executive ceases employment?
What happens in the event of a change
of control?
Is there any ability for the Company
to ‘clawback’ LTI awards?
If the executive’s employment is terminated for cause, all unvested performance rights will lapse unless the Board
determines otherwise. In all other circumstances, unless the Board determines otherwise, a pro rata portion of the executive’s
performance rights, calculated by reference to the portion of the performance period that has elapsed, will remain on foot.
If and when these performance rights vest, shares will be allocated (or a cash equivalent amount will be paid) in accordance
with OZ Minerals’ Equity Incentive Plan Rules and any other conditions of grant.
In the event of a takeover or change of control at OZ Minerals, the Board has the discretion to determine that the vesting of
all or some of the performance rights should be accelerated. If a change of control occurs before the Board has exercised its
discretion, a pro rata portion of the performance rights will vest, calculated on the portion of the relevant performance period
that has elapsed up to the change of control. The Board retains discretion to determine if the remaining performance rights
will vest or lapse.
In the event of fraud, dishonesty, gross misconduct or material misstatement of the financial statements, the Board may make
a determination that could include the lapsing of unvested performance rights, the forfeiture of shares allocated on vesting
of performance rights, and/or repayment of any cash payment or dividends to ensure that no unfair benefit was obtained.
The Board can also adjust awards granted under the STI or LTI plans in the event that there is a catastrophic safety or
environmental event, in which an adjustment is warranted.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 62
REMUNERATION O VERVIEW
Does the Company have a policy in
relation to margin loans and hedging
at risk remuneration?
Under the Company’s Securities Trading requirements, all executives, directors and officers are prohibited from entering into
financing arrangements where the monies owed to the lender are secured against a mortgage over OZ Minerals’ shares.
The Company’s Securities Trading Policy also prohibits executives and employees from entering into any hedging arrangement
over unvested securities issued pursuant to any share scheme, performance rights plan or option plan.
Have the arrangements changed
from last year?
Yes. As communicated in last year’s remuneration report, with effect from 2019, the absolute share price performance
measure has been replaced with a strategic financial measure based on All In Sustaining Costs (AISC).
A holding lock was also introduced on the LTI plan, which requires executives to hold any vested LTI for a period of two years
beyond the initial three year performance period and thereafter shares which have vested will also be subject to minimum
shareholding requirements.
2.5.5 Minimum Shareholding Requirement
Table 3.10 – Minimum Shareholding Requirements for KMP in 2019(a)
Executive KMP
Andrew Cole
Warrick Ranson
Mark Irwin
Shareholding
requirement (%TFR)
Shareholding
(%TFR)(b)
100
50
50
593
21
24
(a) Information at 31 December 2019 based on share price at that date. With expected levels of vesting of the deferred equity element of
the STI and LTI, it is anticipated that all executive KMP should meet their minimum shareholding requirement within the required timeframe.
(b) Includes shares owned and exercisable and performance rights awarded where vesting is only contingent on a service condition being
satisfied.
2.6 Remuneration consultants
The Board of Directors and the People & Remuneration Committee seek and consider advice from
independent remuneration consultants to ensure that they have all of the relevant information at
their disposal to determine executive KMP remuneration. Remuneration consultant engagement is
governed by internal protocols that set the parameters around the interaction between management
and consultants to minimise the risk of any undue influence and ensure compliance with the
Corporations Act 2001.
Protocols
Under the protocols adopted by the Board and the People & Remuneration Committee:
/ remuneration consultants are engaged by and report directly to the Board or the People
& Remuneration Committee
/ the Committee must, in deciding whether to approve the engagement, have regard to any
potential conflicts of interest including factors that may influence independence such as previous
and future work performed by the Committee and any relationships that exist between any
executive KMP and the consultant
/ communication between the remuneration consultants and executive KMP is restricted to
minimise the risk of undue influence on the remuneration consultant
/ where the consultant is also engaged to perform work that does not involve the provision of a
remuneration recommendation, prior approval of the Board or People & Remuneration Committee
must be obtained in certain circumstances where the consultant continues to be engaged to
provide remuneration recommendations.
The Board and the People & Remuneration Committee use remuneration consultants’ advice and
recommendations from time to time. The Board makes its decisions after it considers the issues and
the advice from the People & Remuneration Committee and consultants.
During 2019, EY was engaged to undertake an update to the market benchmarking of executive
remuneration. Their analysis was considered by the People and Remuneration Committee and the
Board in forming their views on remuneration matters. The work completed did not constitute a
remuneration recommendation in accordance with the Corporations Act 2001. The fee for work
conducted was $27,810 (excluding GST).
OZ MINERALS 63
3.0 Company performance and remuneration outcomes
3.1 Company performance
We present a summary of OZ Minerals’ business performance as measured by a range of financial
and other indicators.
Table 4 – Company performance(a)
Measure
Underlying EBITDA – $ million
Net profit/(loss) after income tax – $ million
Net cash inflow from operating activities – $ million
Basic earnings/(loss) per share – cents
Share price at end of year – $
Dividends paid per share – cents
2019
462.4
163.9
510.6
50.7
10.55
23
2018
540.4
222.4
449.6
71.5
8.80
23
2017
539.4
231.1
342.9
77.4
9.16
20
2016
373.8
107.8
324.1
35.7
7.89
20
2015
434.9
130.2
429.8
42.9
4.05
6
(a) Refer to the Financial Review section (page 33) in the Director’s Report for a commentary on the consolidated results, including underlying
performance of the Consolidated Entity.
Table 5 – At risk remuneration performance
Measure
STI(a)
LTI(b)
2019
2018
2017
2016
2015
76.6%
83.5%
83.5%
88.0%
85.0%
100.0%
94.2%(c)
100%
100%
86.4%
(a) % of available STI achieved based on company scorecard results not individual KMP performance.
(b) % LTI plan vested.
(c) % reflects vesting of 2015 and 2016 LTI plans.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 64
REMUNERATION O VERVIEW
3.2 Company performance and STI outcomes for 2019
The Board assessed the Company’s performance in 2019 against the enterprise level KPIs and assessed performance at 3.4 out of 5.
See Table 6 below:
Table 6 – 2019 summary company KPI performanceMeasureKPIWeightingLink to StrategyTarget KPIOutcomePerformance not achieved 0%Threshold Performance 50%Target Performance 70%Maximum Performance 100%12345Financial (40%)Financial Delivery20%Lean & InnovativeEBITDA & AISC as per planExceededFinancial Delivery15%Lean & InnovativeCarrapateena with first concentrateAchievedCapital Management5%Capital DisciplineStrong capital ManagementExceededStrategy & Growth (40%)Organic Growth15%Global CopperIncrease in total base case valuePartially achievedOrganic Growth5%Global CopperIncrease in Brazil base case valuePartially achievedGovernance10%Devolved & AgileOZ Minerals Governance Model embeddedExceededConcentrate sales & customer relationships10%Customer FocusSell 100% of plan on budgeted TCRCsExceededSustainability (20%)Safety10%How We Work TogetherReduced TRIFRAchieved but adjusted(a)Culture5%How We Work TogetherImproved cultural measuresExceededPeople5%How We Work TogetherUplift in people and leadership developmentExceededCompany KPI PerformanceExceeded12345(a) The Company TRIFR was adjusted to 1 out of 5 to recognise the fatality at Carrapateena.OZ MINERALS 65
Table 7 – STI award percentage for executive KMP
In accordance with the procedure set out in Section 2.5.3, an assessment was undertaken of the performance of each of the eligible
executive KMP against their 2019 KPIs. Individual KPIs reflect strategic business objectives and deliverables in an individual’s area of
direct accountability and leadership of safety, culture, innovation and governance across their teams and the Company as a whole.
Executive KMP
Current
Andrew Cole
Warrick Ranson
Mark Irwin
Company KPI performance(a)
(as percent of maximum performance)
Individual KPI performance(b)
(as percent of maximum performance)
Overall performance outcome
(as percent of maximum performance)
76.6%
76.6%
76.6%
81.3%
85.0%
86.5%
77.5%
80.5%
82.0%
(a) Andrew Cole’s STI composition is 80% Company and 20% Individual. Remaining KMPs are 50% Company, 25% Individual and 25% HWWT.
(b) Mr Cole and Mr Irwin’s STI payments for 2019 were reduced by $100,000 and $40,000 respectively to reflect a revision in the assessment of strategy and growth initiatives in the prior year.
Table 8 – STI payments to Executive KMP in 2019
Name
Andrew Cole
Warrick Ranson
Mark Irwin
Maximum
potential value
of payment(a)
Per cent
of maximum
grant awarded(b)
Per cent
of maximum
grant forfeited
Cash Payment
(70%)
Performance
Rights granted
(30%)
$
1,275,000
565,000
545,000
%
69.7
80.5
74.7
%
30.3
19.5
25.3
$
621,688
318,378
284,830
$
266,437
136,447
122,070
Payment
$(c)
888,125
454,825
406,900
(a) The minimum potential value of the payments was nil. The maximum potential value of payment represents the achievement of stretch target.
(b) Rounded to the nearest whole decimal place.
(C) Mr Cole and Mr Irwin’s STI payments for 2019 were reduced by $100,000 and $40,000 respectively to reflect a revision in the assessment of strategy and growth initiatives in the prior year.
Table 9 – 30% STI awards on foot
STI $
Performance Rights(a)
Service period
Expiry date
Vesting outcome
Current
Andrew Cole
Warrick Ranson
Mark Irwin
266,437
136,447
122,070
25,327
12,970
11,604
01/01/2019 – 31/12/2021
15/02/22
To be determined
01/01/2019 – 31/12/2021
15/02/22
To be determined
01/01/2019 – 31/12/2021
15/02/22
To be determined
(a) The number of rights were calculated by dividing 30% of STI by $10.52 being the VWAP over the period 2 January to 30 January 2020.
3.3 LTI performance and outcomes
Performance rights granted under the OZ Minerals LTI Plan are granted for no consideration. Performance rights carry no dividend or
voting rights. One ordinary share in the Company will be allocated on vesting of a performance right. The vesting conditions for grants
before 2019 are the relative TSR performance consistent with the details in Table 3.7 and absolute share price growth of the Company
over the relevant performance period as detailed beneath Table 3.8. For 2017 LTI the TSR was assessed independently at 75% and absolute
share price had an increase of 32.86%, resulting in full vesting of the Plan. For grants from 2019 onwards the vesting conditions are the
relative TSR and AISC performance. In general, the executive must also remain employed with OZ Minerals for a continuous period of
three years from the grant date. Details of the prior awards for relevant executive KMP are set out in the Remuneration Report for the
year in which they were granted.
Details of the performance rights held by executive KMP that vested or lapsed during the year are set out in Table 17. Additional details
are set out in Note 13 to the Financial Statements.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 66
REMUNERATION O VERVIEW
The LTI awards on foot during the year are detailed below:
Table 10 – LTI awards on foot
Grant date
Rights
Maximum value
of grant(a)
$)
Fair value per
performance right(b)
$
Performance
period
Expiry
date(d)
Vesting
outcome
Current
Andrew Cole
29 May 2019
138,270
24 April 2018
130,285
24 July 2017
135,446
5 July 2016
201,223
21 July 2015
154,344
Warrick Ranson
29 May 2019
55,145
13 March 2018
11,400(c)
6 February 2018
51,300
Mark Irwin
29 May 2019
53,193
13 March 2018
11,400(c)
6 February 2018
51,300
1,595,636
1,390,141
1,353,106
1,722,469
754,742
636,373
121,638
547,371
613,847
121,638
547,371
6.92
5.87
4.29
3.88
3.47
6.92
8.81
6.03
6.92
8.81
6.03
1/01/2019 – 31/12/2021
15/02/22
To be determined
1/01/2018 – 31/12/2020
15/02/21
To be determined
1/01/2017 – 31/12/2019
15/02/20
100% vested
1/01/2016 – 31/12/2018
15/02/19
88.3% vested
1/07/2015 – 30/06/2018
15/08/18
100% vested
1/01/2019 – 31/12/2021
15/02/22
To be determined
1/01/2018 – 31/12/2019
15/02/20
100% vested
1/01/2018 – 31/12/2020
15/02/21
To be determined
1/01/2019 – 31/12/2021
15/02/22
To be determined
1/01/2018 – 31/12/2019
15/02/20
100% vested
1/01/2018 – 31/12/2020
15/02/21
To be determined
(a) The minimum value of each grant is nil. The maximum value of grant is calculated by applying the highest price of OZ Minerals’ shares during the year to the rights issued during the year.
(b) The fair values were calculated as at the grant dates. In accordance with the requirements of applicable Accounting Standards, remuneration includes a proportion of the notional value of
performance rights as compensation granted or outstanding during the year. The notional value of performance rights granted as compensation is determined as at the grant date and progressively
allocated over the vesting period. The amount included as remuneration is not related to or indicative of the benefit (if any) that individual executives may in fact receive. The values were calculated
by an external third party based on a Monte-Carlo simulation model.
(c) Performance rights granted under 2018 alignment plan were a one off allocation for retention purposes.
(d) Expiry date does not consider holding lock periods.
4.0 Executive KMP employment arrangements
Remuneration arrangements for executive KMP are formalised in executive service agreements. Each agreement provides for the payment
of fixed remuneration, performance-related cash bonuses under the STI plan, other benefits, and participation in the Company’s LTI plan.
Table 11 – Executive KMP key provisions
Term of contract
2019 TFR
Notice period
Termination benefit
Name
Current
Andrew Cole
Permanent – ongoing until notice has
been given by either party.
$850,000
Warrick Ranson
Permanent – ongoing until notice has
been given by either party.
$565,000
Mark Irwin
Permanent – ongoing until notice has
been given by either party.
$545,000
Twelve months’ notice by the Company.
Six months’ notice by Andrew Cole.
Company may elect to make payment
in lieu of notice.
No notice period required for termination
by Company for cause.
Three months’ notice by either party.
Company may elect to make payment
in lieu of notice.
No notice required for termination by
Company for cause.
Three months’ notice by either party.
Company may elect to make payment
in lieu of notice.
No notice required for termination by
Company for cause.
Twelve months fixed remuneration in
the case of termination by the Company.
Nine months fixed remuneration in the
case of termination by the Company.
Nine months fixed remuneration in the
case of termination by the Company.
OZ MINERALS 67
5.0 Executive KMP remuneration
Table 12 – Total rewards to executive KMP
Short term benefits
Long term benefits
Salary,
fees and
allowances
Benefits &
Allowances(a)
Accrued
annual
leave(b)
Super-
annuation(c)
Short term
incentive
(Cash Payment)
Other
long term
benefits(d)
Value of
performance
rights(e)
Value of
performance
rights (STI
deferred)(f)
Total
remuneration
Performance
Related
Current
Andrew Cole
Managing
Director
& CEO
Warrick
Ranson
Chief
Financial
Officer
Mark Irwin
Chief
Commercial
Officer
2019
829,233
2018
779,710
2019
544,233
–
–
–
21,224
20,767
621,688
36,175
825,368
88,812
2,443,267
(5,554)
20,290
801,600
26,142
816,782
–
2,438,970
41,799
20,767
318,378
9,339
289,250
45,482
1,269,248
2018
504,710
104,603
33,761
20,290
350,700
4,158
141,187
–
1,159,409
2019
501,002
2018
464,062
–
–
3,307
20,767
284,830
6,076
285,022
40,690
1,141,694
11,254
20,290
324,585
1,781
141,187
–
963,159
62.9
66.4
51.5
42.4
53.5
48.4
(a) Other benefits include the value (where applicable) of benefits such as compulsory annual health checks, car parking or other benefits that are available to all employees of OZ Minerals,
and are inclusive of Fringe Benefits Tax where applicable. Other benefits paid to Mr. Ranson in 2018 include payment of his relocation costs.
(b) Annual leave has been separately categorised and is measured on an accrual basis and reflects the movement in the accrual over the 12 month period. Any reduction in accrued annual leave
reflects more leave taken/cashed out than that which accrued in the period.
(c) Represents direct contributions to superannuation funds. Amounts greater than the maximum superannuation level have been paid and included in cash salary.
(d) Represents the net accrual movement for Long Service Leave (LSL) over the 12 month period which will only be paid if Executive KMP meets the required service conditions.
(e) The fair values were calculated as at the grant dates. In accordance with the requirements of applicable Accounting Standards, remuneration includes a proportion of the notional value of equity
rights compensation granted as LTI and STI or outstanding during the year. The notional value of equity rights granted as compensation which do not vest during the reporting period is determined
as at the grant date and progressively allocated over the vesting period. The amount included as remuneration is not related to or indicative of the benefit (if any) that individual executives may in
fact receive. The values were calculated by an external third party based on a Monte Carlo simulation model.
(f) Reflects actual value of deferred STI which is provided in the form of performance rights. The total value of the deferred STI is recognised proportionally over the period the executive is required
to provide service.
6.0 Non-executive Director remuneration
6.1 Non-executive Director remuneration policy
Non-executive Director (NED) remuneration is reviewed annually by the Board. NEDs receive a fixed remuneration consisting of a base fee
and additional fees for committee roles.
Consistent with best practice, NEDs do not receive any form of equity incentive entitlement, bonuses, options, other incentive payments
or retirement benefits. As approved at the OZ Minerals General Meeting on 18 July 2008, the maximum fees payable per annum are
$2,700,000 in total.
Table 13 – Details of NED remuneration with effect from September 2018
Fees
Board base fee
Audit
Sustainability
People & Remuneration
Chairman
$ per annum
Member
$ per annum
328,921
43,056
26,910
26,910
126,330
21,528
13,455
13,455
All Directors (including the Chairman) are entitled to superannuation contributions (or cash in lieu thereof) equal to 9.5% calculated on
base Board and Committee fees listed in Table 13, and are entitled to be reimbursed for travel and other expenses properly incurred by
them in attending any meeting or otherwise in connection with the business or affairs of the Company, in accordance with the Company’s
constitution. The Chairman of the Board does not receive additional fees for being a member of any Board committee.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 68
REMUNERATION O VERVIEW
6.2 Total fees paid to NEDs
In 2019, NEDs received $1,017,201 (2018: 1,067,751) in total fees, compared to the maximum approved fees payable of $2,700,000.
Table 14 – Total remuneration paid to NEDs
Board fees and
cash benefits
$
Committee
$
Superannuation
Fees(a)
$
Total fixed
remuneration
$
Current
Rebecca McGrath
Chairman
Charlie Sartain
Non-executive Director
Peter Wasow
Non-executive Director
Richard Seville
Non-executive Director
Tonianne Dwyer
Non-executive Director
Former
Marcelo Bastos(b)
Non-executive Director
Total
2019
2018
2019
2018
2019
2018
2019
2019
2018
2019
2018
2019
2018(c)
339,444
328,464
126,330
52,136
126,330
122,320
21,054
126,330
122,320
36,846
42,110
776,334
667,349
–
–
48,438
19,734
56,511
47,968
5,830
48,438
44,850
3,923
4,483
163,140
117,036
20,724
20,290
16,603
6,828
17,370
16,177
2,554
16,603
15,881
3,873
4,426
77,727
63,602
360,168
348,754
191,371
78,698
200,211
186,465
29,438
191,371
183,051
44,642
51,019
1,017,201
847,987
(a) Represents direct contributions to superannuation funds based on quarterly contribution limits under Super Guarantee Charge regulations. Amounts greater than the maximum superannuation
level have been paid and included in cash salary.
(b) Ceased to be Non-executive Director 5 April 2019.
(c) Total for 2018 reflects only the remuneration of 2019 Non-executive Director Board members only.
6.3 Minimum Shareholding requirements NED
NEDs are required to accumulate and maintain a holding in OZ Minerals’ shares that is equivalent to at least 100% of the NED base
fee (calculated on the purchase price of shares) within 5 years from the date of appointment as a director or appointment as Chair.
Table 15 – Minimum Shareholding Requirements NED in 2019(a)
NED
Rebecca McGrath
Charlie Sartain
Peter Wasow
Richard Seville
Tonianne Dwyer
Current shareholding requirement
(% Annual Base Fees)
Shareholding
(% Annual Fees)(b)
100
100
100
100
100
82
476
97
–
92
Deadline
24/05/22
01/08/23
01/11/22
31/10/24
22/03/22
(a) Information at 31 December 2019.
(b) Calculated as amounts paid per share divided by the directors’ annual fees.
OZ MINERALS 69
7.0 Equity instrument disclosure relating to KMP
The movement in the number of shares held by each KMP during the year is set out below:
Table 16 – KMP shareholdings
Non-executive Directors
Balance at 1 January 2019
or date becoming KMP
Shares acquired on
exercise of rights
Net other
movements
Balance at 31 December
2019 or date ceasing
to be KMP
Current
Rebecca McGrath
Charlie Sartain
Peter Wasow
Richard Seville
Tonianne Dwyer
Former
Marcelo Bastos(a)
Executive KMP
Current
Andrew Cole
Warrick Ranson
Mark Irwin
Total
37,935
70,000
8,000
–
10,000
–
164,344
–
1,000
291,279
–
–
–
–
–
–
177,756
–
–
4,900
–
6,000
–
5,000
–
–
–
–
177,756
15,900
42,835
70,000
14,000
–
15,000
–
342,100
–
1,000
484,935
(a) Ceased to be Non-executive Director 5 April 2019.
Table 17 – KMP performance rights holdings
Balance at
1 January 2019
Granted as
remuneration(a)
Value of
rights
granted(b)
$
Vested
Exercised
Value of
rights
vested(c)
$
Balance at
31 December
2019
Vested and
exercisable(d)
Lapsed
Current
Andrew Cole
Warrick Ranson
Mark Irwin
Total
443,487
62,700
62,700
568,887
138,270
956,828
135,446
177,756
1,453, 605
55,145
53,193
381,603
11,400
368,096
11,400
–
–
122,345
122,345
246,608
1,706,527
158,246
177,756
1,698,295
–
–
–
–
404,001
117,845
115,893
637,739
135,446
11,400
11,400
158,246
(a) Does not included performance rights from the 2019 STI that will be granted. Table 9 contains details of rights granted subsequent to year end.
(b) The fair value of the performance rights granted to Mr. Cole and other KMP on 29 May 2019 was calculated on the grant date as $6.92. Subject to the achievement of relevant performance
conditions, these rights would be expected to vest on 31 December 2021.
(c)) Value of rights vested calculated as number of rights vested times VWAP over the period 2 December to 31 December 2019.
(d) Rights vested and exercisable are considered in the Balance at 31 December 2019. They represent rights which vested on 31 December 2019 for which shares are issued in early 2020.
8.0 Other transactions with executive KMP or NEDs
There were no loans made to executive KMP, NEDs or their related parties during the year. There were no other transactions between
the Company and any executive KMP, NED or their related parties other than those within the normal employee, customer or supplier
relationship on terms no more favourable than arm’s length.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT
2019
Sustainability
Report
2019 Stakeholder Value Day
Going beyond what’s
possible to make lives better
72
SUSTAINABILITY REPORT
Format
We have been publishing our sustainability
performance since 2008. In 2016, we combined
our annual and sustainability reports to provide a
transparent account of our approach to creating
value in a financially, environmentally and socially
responsible manner for our stakeholders.
You’ll find examples of this in practice embedded
through our 2019 Annual & Sustainability Report
to reflect how we have integrated sustainability
into our operations.
Stakeholder Alignment with
Sustainability Performance Elements
Creating value for our stakeholders is at the
centre of OZ Minerals’ Strategy. Our 2019
Sustainability Report shows how the elements
of sustainability align with our stakeholders.
This year, we have also illustrated our
alignment with the United Nations Sustainable
Development Goals (SDGs). The elements
of sustainability at OZ Minerals show how
we are contributing to specific SDGs.
Organisational boundary and scope
We disclose sustainability data in accordance
with Global Reporting Initiative (GRI) Standards.
The GRI Standards are a comprehensive set
of guidelines that cover all dimensions of
sustainability. Further information is available
on the GRI website. We also reference
supporting documents which form part of
our sustainability disclosures. These documents
are publicly available on our website to make
specific information more accessible.
This Sustainability Report covers the performance
of our Prominent Hill and Carrapateena assets,
and facilities over which OZ Minerals had
operational control for the full 2019 calendar
year. Joint ventures which we do not operate
are excluded.With respect to Antas operations,
limited data is provided as we are in the process
of aligning Brazilian sustainability reporting with
Australian requirements.
Sustainability at OZ Minerals
Sustainability management is integrated into
The OZWay, which governs operating asset
accountabilities within our devolved operating
model and our Strategy.
Our Company’s governance framework
(page 19) consists of Strategy, Performance
Standards that set the minimum benchmarks and
expectations of performance for global assets,
Process Standards that support the operation
of the business, company policies that show
the overarching intent within the business and
enable our stakeholders to hold us to account,
and the annual business planning process which
sets the priorities. These all support OZ Minerals
in being a Modern Mining Company that creates
value for our stakeholders.
United Nations Sustainable Development Goals
OZ MINERALS 73
Materiality Matrix
Our process for assessing materiality complies
with the GRI guidance on materiality and
completeness when identifying material
topics and referenced a range of internal
and external considerations and priorities.
Methodology
In 2019, we expanded the range of material
topics from eight to 18 to reflect the different
operating contexts of our assets as a global
business. We recognise some topics are
strongly related, however to better understand
materiality, we have intentionally separated some
topics as individually material in our assessment,
for example, energy, waste and water are linked
to climate change which is discussed in detail on
page 81.
Assurance
OZ Minerals engaged KPMG to undertake
limited assurance over selected information
in this report. The full details of the process,
scope of the assurance engagement and the
outcome are detailed in KPMG’s assurance
statement on page103.
Materiality
The 2019 OZ Minerals materiality assessment
has included evaluation of local and global
threats and opportunities based on external
review, benchmarking, biannual internal risk
reviews, stakeholder consultation and external
materiality survey. We assess sustainability
matters based on two criteria: their importance
to our business in terms of growth, economic
and social impact, and their importance
to stakeholders – including shareholders,
community, employees, governments and
suppliers. Material topics are discussed in
this report and many are also covered in the
Risk section of the Directors report, including
climate risk, with further information on other
sustainability topics available on the OZ Minerals
website.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORTInfluence on economic, social and environmental performanceLowHighHighInfluence on stakeholder assessment and decisionsEconomic PerformancePartnershipsBiodiversityIndigenous PeoplesLocal CommunitiesEmploymentEnergyDiversityProcurement PracticesTraining & EducationIndirect Economic ImpactsWaterOccupational Health & SafetyClimate ChangeSupplier AssessmentsEffluents & WasteHuman RightsBusiness EthicsLocal material issueIndustry material issueInfluence on economic, social and environmental performanceLowHighHighInfluence on stakeholder assessment and decisionsEconomic PerformancePartnershipsBiodiversityIndigenous PeoplesLocal CommunitiesEmploymentEnergyDiversityProcurement PracticesTraining & EducationIndirect Economic ImpactsWaterOccupational Health & SafetyClimate ChangeSupplier AssessmentsEffluents & WasteHuman RightsBusiness EthicsLocal material issueIndustry material issue 74
SUSTAINABILITY REPORT
External recognition,
voluntary commitment
and external benchmarking
Macquarie ESG rankings
In November 2019, OZ Minerals was ranked in
the first quintile by Macquarie’s ESG ratings of
ASX100 Companies. The 2019 disclosures of
231 Australian-listed companies were assessed,
representing 87% of the ASX300 by market
capitalisation.
FTSE4Good
In June 2019, FTSE Russell confirmed that
OZ Minerals had been independently assessed
according to the FTSE4Good criteria and
became a constituent of the FTSE4Good Index
Series. The FTSE4Good Index is designed
to measure the performance of companies
demonstrating strong environmental, social
and governance practices.
Global Reporting Initiative
GRI is an independent international
organisation which has established the leading
international framework and standards for
sustainability reporting. OZ Minerals prepared
the Sustainability section of the 2019 Annual
and Sustainability Report in accordance with
the GRI Standards (Core).
Sustainable Development Goals
In January 2016, 193 UN member states
adopted 17 Sustainable Development Goals
(SDGs). These goals and their related targets
address the most important global sustainability
challenges and can stimulate worldwide
transformational change. OZ Minerals recognises
that global megatrends, such as climate change,
globalisation, digitalisation and automation
will impact our operations and inform our
modernisation agenda.
OZ Minerals’ vision is to become a global copper-
core modern mining company. Creating value
for our key stakeholders is at the heart of our
Strategy and shapes our global focus, products,
operations, and how we work with stakeholders.
Member of the International
Copper Association Australia
OZ Minerals is a member of the International
Copper Association Australia, the peak body
for the copper industry in Australia whose core
work is sustainable development. The benefits
of copper range widely; from renewable energy
and energy access to climate-change mitigation
and adaptation, many global trends driving the
sustainable-development agenda rely on copper
and its unique properties.
OZ MINERALS
75
Managing Sustainability
at OZ Minerals
Our sustainability aspiration
We are a global copper-core modern mining
company. We deliver superior value across
multiple operating assets underpinned
by a diverse exploration and project pipeline.
Accountability
Operating assets are accountable for
delivering the sustainability elements.
At a corporate level, we drive and monitor
our approach and outcomes through:
We are committed to building our business
sustainably – operating ethically, safely, minimising
our environmental footprint, ensuring we are
well-governed and are socially responsible – core
elements of creating value for our stakeholders,
the heart of our company strategy.
How we do things is as important as what
we do. The OZWay defines how we work,
our culture and behaviours.
We deliver on our sustainability aspirations at
OZ Minerals by focusing on value creation for
our stakeholders and we report on our value
creation achievements under the sustainability
elements of Safety, Environment, Community
and Health and Wellbeing.
Strategy
The Strategy, Business Plan and Policies
and Standards which are reviewed and
set on an annual basis.
Compliance
The Board and management review
compliance with the Performance Standards
throughout the year and Significant Incidents
are reviewed by the Executive Committee
with material incidents elevated to the Board
Sustainability Committee.
Risk
Operating assets provide visibility of material
opportunities and threats via the risk
register. We ensure these accountabilities
are met through our planning process
and governance structure.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 76
SUSTAINABILITY REPORT
OZ Minerals’ strategy
Our Indicators
Shareholders
Employees
Suppliers
Community
Government
We deliver consistent top quartile Total Shareholder Return. We meet or exceed market
expectations. We are ethical, well governed and socially responsible.
We have a safe work environment that empowers people to positively impact the business.
Our people enjoy coming to work. They are engaged, valued and inspired to grow through
exceptional leadership.
We preferentially partner with local and land connected and indigenous suppliers. We seek
win-win relationships that deliver shared value, build capability and enable us to innovate.
We add real value to the communities where we operate, building enduring partnerships
aligned with their aspirations. They recognise our contribution and advocate on our behalf.
We operate in a socially and environmentally responsible manner and create economic value.
We have bipartisan support for the ongoing development of our portfolio.
Our Performance – Total Economic Contribution $894 million
Shareholders
Employees
Suppliers
Community
Government
Share Price Growth – 20%
Earnings per share –
50.7 cents
Fully franked dividends –
$74.3 million
Three mines
TRIFR – 4% increase
from 7.24 in 2018 to
7.52 in 2019(a)
Total Employees – 97%
increase (375 to 740)
Engagement above industry
benchmark – 78%(c)
193 Aboriginal people in
Australian workforce(b)
representing 6% of FTE
workforce
Carrapateena project
spend – 98%
Australian Entities
2 new traditional
owner businesses
established
Carrapateena SA contract
value spent – $236 million
OZ Minerals
Stakeholder Day
Upper Spencer Gulf
contract spend
increased to $42 million
Flagship Social
Contribution Program
with The Smith Family
and Clontarf Foundation
Scope 1 Emissions:
10% decrease(c)
Scope 2 Emissions:
5% increase(c)
Total Emissions:
253,898 tonnes
of CO2-e: stable(c)
No material environmental
incidents were recorded
(a) Excludes Brazil
(b) Employees and contractors
(c) Australia only
OZ MINERALS Safety
High standards and leadership
in the area of safety for all
stakeholders.
Carrapateena ‘Bring it Home’
OZ Minerals recognises that the construction phase
of asset development is complex and statistically poses
risks to employees and contractors. To embed safety
performance at Carrapateena, we launched the site
wide ‘Bring it Home’ campaign together with our
key contract partners. The campaign was designed
to enhance personal and professional pride, focus
and performance as the Carrapateena construction
and commissioning program neared its final stages.
Safety and wellbeing are important to us and it is the
responsibility of all employees onsite. ‘Bring it Home’
was developed together with a performance coach and
included a range of activities and initiatives aimed to
give people a positive boost and identify and promote
best practice.
RISKS
Operational safety and health
OZ Minerals is committed to high standards of the safety
of our operations, including employees, contractors, and
the communities in which we operate. Protecting the
health and wellbeing of our workforce is vital.
SU PPOR TIN G D OC UM EN T S
Management approach
Stakeholder Value Creation Policies
ozminerals.com/about/corporate-governance
Safety performance standards
Isolation, Fixed and Mobile Equipment,
Electrical Safety, Fall Prevention, Confined
Spaces, Ground Control, Explosives,
Fire Prevention, Aviation, Inundation
ozminerals.com/sustainability/safety
Performance data
Safety Data Table, p. 97
CASE STUDY 78
SUSTAINABILITY REPORT
Safety culture and leadership
We understand mining activities can impact
people’s safety. As leaders, we actively care
for everybody involved in our operations and
supporting services. We’re committed to
identifying, evaluating and managing all the
associated threats for actual and potential
adverse impacts as far as is reasonably
practicable.
In March 2019, OZ Minerals was saddened
and confronted by a fatal incident involving
an ElectraNet sub-contractor associated with
the construction of the Carrapateena Project.
The death of the pilot who was undertaking
helicopter stringing has had a profound effect
on the company, and is discussed in earlier
sections of this report.
Our target is to achieve an injury and
occupational disease-free workplace by ensuring
hazards are identified and managed at source.
All safety incidents are thoroughly investigated,
we share what we’ve learned, and we implement
corrective actions. Safety data is collected for the
entire workforce (employees, contractors, visitors
working on our sites) and weekly reports are
made to management, including the Managing
Director and Chief Executive Officer. Performance
is monitored by our leadership team.
We conduct annual internal audits against select
company processes and standards, and external
assurance as part of the annual Sustainability
Reporting process.
The number of recordable workplace injuries
in many of our departments has been reduced
as a result of active engagement from our senior
leadership and activities focused on identifying
and eliminating the causes of incidents.
Significant incidents and incident trends are
comprehensively reviewed by the Board’s
Sustainability Committee to ensure that we learn
from incidents, there is a focus on compliance
with approved processes, and we implement
additional controls where necessary.
Safety statistics are calculated per one million
working hours and inclusive of our Prominent
Hill and Carrapateena Mines as well as facilities
under OZ Minerals’ operational control. In
2019, the total recordable injury frequency
rate (TRIFR) per million hours worked increased
by 4% from the previous year’s TRIFR of 7.24.
We have set a TRIFR target of 5.50 (including
Brazil) for 2020 which will require an improved
performance on 2019 despite ongoing
construction activity in Australia and Brazil.
We monitor lead indicators to reduce workplace
hazards and injuries. Incidents are internally
rated against potential or actual consequence
and likelihood and assessed for their impact
on safety, health, environment, community
and financial metrics. This helps us to identify
significant incidents that warrant in-depth review
and analysis. All significant safety incidents are
thoroughly investigated using the Incident–
Cause–Analysis Method (ICAM).
Significant incidents are those deemed to have:
/ high potential or actual serious consequences,
or
/ recordable incidences and disabling injuries.
We released Process Standards across all
assets in 2019 as a component of our updated
governance framework, including the Incident
Reporting and Investigation Process Standard
which sets out the process for identifying,
elevating and reporting incidents, including
safety-related incidents.
The Risk Management Standard, and its
supporting guidelines, is a critical Process
Standard and its five stakeholder pillar Risk
Specification table supports the Incident
Reporting and Investigation Process Standard.
Contractor management
Our projects are delivered in partnership with
contractors and suppliers and we rely in part
on their capabilities to carry out our operations.
Our management system defines the
requirements and practices for working with
contractors and suppliers. Major contractors sign
agreements with requirements consistent with
our Code of Conduct, policies and standards.
They must share our values and exhibit behaviour
that ensures workforce safety.
All contractors are subject to a pre-qualification
process and are comprehensively evaluated
against criteria including safety, health,
environment and community aspects as well as
risk management, internal auditing processes
and employee management.
Minimum criteria (safety and environment)
and performance criteria (including operating
performance and site management) are
developed and applied to our contracts.
OZ MINERALS 79
Management approach
Fitness for Work Performance
Standard, Medical Programs
Performance Standard
ozminerals.com/sustainability
Safety programs
Effective safety management means that we:
/ provide a safe working environment with
supportive processes and systems
/ empower our workforce to raise safety issues
before there is potential for an incident
/ thoroughly investigate incidents when
they occur
/ implement controls to reduce the likelihood
of recurring incidents using sound risk
management practices.
We have a number of initiatives in place to
mature our safety culture. Our focus is on
developing leadership to play an important part
in our safety culture through demonstrating
and promoting safety in the workplace. All our
employees and the employees of our contract
partners are empowered to cease operations if
necessary to ensure the safety of the workforce.
We are committed to preventing work-related
injuries and illnesses. Our key safety programs
such as the critical risk assurance program are
underpinned by internal auditing of compliance
against our safety performance standards
and identifying opportunities for continuous
improvement.
Training and emergency preparedness
We continuously explore and adopt methods
to ensure we grow the capability of leaders
and employees. Our Crisis Management Plan
outlines the roles, responsibilities and processes
that our corporate Crisis Management Team
would follow during a crisis event. The team
includes representatives from operations, legal,
commercial, safety, environment, community,
media and government relations. We define a
crisis as an event that seriously threatens people,
operations, assets, the environment or our
long-term prospects and reputation. Our assets
have specific emergency management plans that
outline the response in the event of an onsite
emergency. We conduct scenario training with
the operating assets’ management teams and
the corporate crisis management team. We hold
regular emergency exercises, both desktop and
practical, to test our emergency preparedness.
CASE STUDY
COMMUNITY EM ERG ENC Y RES PO NSE SUP P ORT
On 6 July 2019 the Royal Flying Doctors
Service (RFDS) landed on the Traeger
Roadstrip, near Glendambo in South
Australia’s Far North to airlift a critically
injured patient following a motor vehicle
accident. The accident occurred on the
Stuart Highway at Mt. Eba, near the
Bulgunnia turnoff. First-responders and
outback emergency services closed the
highway for RFDS to safely land and airlift
the patient to safety. Emergency Services
from the town of Coober Pedy included
SA Police, SA Ambulance, Mine Rescue/
SES and the CFS. OZ Minerals’ Prominent
Hill Mine Emergency Response Team
(ERT) also responded to support the
local emergency services.
Michael Beelitz, ERT Unit Manager
said,“It was a wonderful team response
from all agencies in town to successfully
rescue the young lady involved in the
accident.”
“Our team coordinated the closure of
the roadstrip and supported the RFDS
team to stabilise and load the patient
onto the plane. It was really good to see
the Traeger Roadstrip utilised and be able
to support a successful rescue,” he said.
“Thank you to all of our local volunteers
for responding to tourist incidents and
the Flying Doctor Service for also keeping
our country as safe as possible.”
RFDS airplane landing at Traeger Roadstrip near
Glendambo to airlift a critically injured patient.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT Environment
Minimising our impact and
caring for the natural environment
is vital for our sustainability.
Shared water use for Carrapateena
Water is essential for our stakeholders and we appreciate
the critical importance of sustainable water management
in the mining and resources sector.
In the development of the Carrapateena mine we
focused on identifying and defining a sustainable
water supply to meet the forecast demands of the site.
Through 2017 and 2018 we conducted extensive water
exploration drilling in the region, which is currently
being further explored from an advanced exploration
viewpoint, to confirm sustainable pumping rates of
identified wells.
Carrapateena has developed the Northern Wellfield so
it uses the underground mine water inflows which are
heavily saline and not suitable to pastoralism, to enable
application of sustainable practices for the operation and
to access a water source independent of pastoral station
operators.
OZ Minerals has worked with the South Australian
Department of Mines (DEM) and the local pastoral
stations to provide a treated water supply to the station
for stock operations, creating a sustainable water source
to support local pastoral operations.
CLIMATE RISK
OZ Minerals recognises the physical and non-physical
(transition) impacts of climate change may affect our
assets, productivity, the markets in which we sell our
products, and the communities in which we operate.
Risks related to the physical impacts of climate change
include acute risks resulting from increased severity of
extreme weather events and chronic risks resulting from
longer-term changes in climate patterns.
Non-physical risks arise from a variety of policy,
regulatory, legal, technology, and market responses
to the challenges posed by climate change and the
transition to a lower-carbon economy.
SU PPO RT ING D O CU ME NTS
Environmental governance
Sustainability Committee Charter,
Stakeholder Value Creation Policies
ozminerals.com/about/corporate-governance
Management approach
Governance Framework, p. 21
Environmental Performance Standards
ozminerals.com/sustainability/environment
Performance data
Environmental Data Tables, p. 97–98
CASE STUDY 81
Management approach
OZ Minerals Emissions and Resource
Efficiency Standard
ozminerals.com/sustainability/
environment
Climate Change statement
ozminerals.com/sustainability/
Climate-Change-Statement/
Annual reporting obligation
National Greenhouse and Energy
Reporting Scheme (NGERS)
Voluntary disclosure
Task Force on Climate-related
Financial Disclosures
fsb-tcfd.org
Performance data
Energy and Greenhouse Gas Data
Table, p. 97
EMC Program
Energy and Mining Collaboration
p. 82
Climate change, energy use and greenhouse gas emissions
Climate change was one of the highest ranking
topics in this year’s materiality assessment.
Climate-related risks and the control actions
are detailed in the risk section of the Directors’
Report (page 41). We are a copper-core
modern mining company and as such provide
a metal that is in high demand in the rapidly
growing low carbon economy. We seek to
conduct our activities socially, ethically and in
an environmentally responsible manner.
During the year we developed a climate
change statement in which we support the
Paris Agreement objectives to limit the global
average temperature rise to below 2 degrees
Celsius. In this statement we commited to
playing our part in reducing carbon emissions
and preparing for the impacts of climate change
along with the actions needed to achieve net-
zero carbon emissions by 2050.
We also committed to developing a Roadmap
for reporting of integrated climate risks and
climate-related financial disclosures in line with
the Task Force on Climate-related Financial
Disclosures (TCFD) framework.
That Roadmap has been developed and is
aligned with and will be integrated into our
OZWay of working. Integrating climate risk
management and TCFD within the elements of
how we work – our strategy and our governance
framework which includes our risk and other
process standards, our policies and performance
standards - ensures implementation across the
Company and our devolved operating assets.
As the Roadmap outlines, we aim to leverage
and modify our Risk Management Specifications
to comprehensively accommodate opportunities
and threats arising from climate-related risk.
Identifying both opportunities and threats for
our business is key to delivering our Strategy
in which creating value for all stakeholders is
central. We will continue to assure our responses
to our identified climate risks are occurring and
we will disclose progress in our annual reporting.
Our Action Plan
Actions aim to embed climate risk within OZ Minerals and progressively expand our performance and overall approach.
2019
Actions to Date
2020
Enhancing our approach
2021–22
Defining our performance
>2022
Maturing our approach
TCFD Roadmap
e / Board and Management endorsed
c
n
a
n
r
e
v
o
G
both threats and opportunities
/ Risk framework specifically recognises
/ Further build capability across business
/ Bi-annual review of climate-related
/ Review governance
to implement TCFD via The OZWay
control actions
/ Gap analysis of climate risk management
across governance practices (Policies,
Performance and Process Standards)
/ Continue to build employee capability
regarding climate-related risk
/ Developed our opportunities-focused
/ Gap analysis of Policies, Performance
Global Copper Strategy
and Process Standards
approach to climate-related
threats and opportunities
/ Review climate-related roles
and responsibilities
/ Consider material
climate-related threats
and opportunities in
asset planning
/ Enhance suite of internal
decision-making tools
/ Conduct further physical and transition
climate-related opportunity and threat
assessment using scenario analysis,
incorporating assets and corporate
functions. Consider outcomes as part
of annual strategy reviews
/ Implement priority control actions
/ Further refine internal decision-making
tools (e.g. carbon pricing)
/ Begin asset scenario analysis
/ Consult with key stakeholders and
undertake peer and market benchmarking
/ Further explore strategic partnering
opportunities
/ Introduce climate adaptation to
Transformation function
/ Integrate climate risk, including carbon
pricing into investment decisions and
project evaluations
y
g
e
t
a
r
t
S
/ Acknowledged scientific consensus
on climate change and Paris
Agreement objectives
/ Established dedicated long-term
strategy Transformation Corporate
Function
/ Established seven-partner Energy
and Mining Collaboration (EMC)
to investigate opportunities for mine
site renewable energy integration
and energy and fuel optimisation
/ Developed an internal carbon price
/ Current exposure to Cu and Ni, both
needed for a clean energy future
k
s
i
R
t / Climate change identified as
n
e
material strategic risk
m
e
g
a
n
a
M
/ Risk management framework matured
to assess opportunities and threats
against five stakeholder value pillars
/ Review current climate-related risks
/ Ensure climate-related opportunity
and threat control ownership is
clearly defined
/ Further refine approach
to climate-related risk
management
/ Disclosure of scope 1 and 2 emissions,
energy, water, waste
/ Consider appropriate metrics
/ Establish quarterly reporting
/ Publicly committed to implementing
of key metrics by assets
the TCFD Recommendations
d
n
a
s
c
i
r
t
e
M
s
t
e
g
r
a
T
/ Support risk owners to manage climate-
related opportunities and threats
/ Develop plan for public reporting
on financial related disclosure of
climate related risk
/ Integrate performance reporting
into disclosures (annual, quarterly,
monthly, website)
/ Continue to report on
material metrics
/ Report performance
against target(s)
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT
82
SUSTAINABILITY REPORT
Our two major operations are connected to the
South Australia electricity grid which is estimated
to comprise approximately 50% renewable
energy. In Brazil, all electricity used by our assets
is derived from renewable hydro electricity.
In 2019, the majority of OZ Minerals’ energy
use occurred at the Prominent Hill mine as the
largest operating mine in the portfolio. The
two main areas of energy consumption were
the processing plant (electricity) and mining
vehicles (diesel fuel).
In 2019, Prominent Hill’s mining activities
were underground-only having successfully
completed the transition from the open pit.
OZ Minerals’ energy demand will continue
to increase following the commissioning and
production ramp up of the Carrapateena mine.
Our Australian assets have reported the
following energy use and greenhouse gas
emissions in line with NGERS:
/ Scope 1 Emissions (mainly onsite fuel
combustion): 77,271 tonnes of CO2-e
(10% decrease compared to previous year)
/ Scope 2 Emissions (grid electricity):
176,627 tonnes of CO2-e (5% increase
compared to previous year)
/ Total Scope 1 and Scope 2 Emissions:
253,898 tonnes of CO2-e (stable
compared to the previous year)
/ Diesel use is Prominent Hill’s primary source
of Scope 1 greenhouse gas emissions.
/ OZ Minerals did not sell energy in 2019.
Management approach
OZ Minerals Water Performance
Standard, OZ Minerals Tailings
Performance Standard,
OZ Minerals Waste and Waste
Water Performance Standard
ozminerals.com/about/corporate-
governance
Performance data
Water Data Table, p. 98
Water
Water is essential for our operations and our
stakeholders. Our water management includes
many facets of performance such as water use,
tailings, climate change, stakeholder values and
water recycling.
Our Australian assets, Prominent Hill and
Carrapateena, are situated in areas with
an average annual rainfall of less than
200 millimeters per year and depend on
groundwater to sustain operations. Our
wellfields are located on nearby pastoral stations
and, in the majority of cases, the pastoralists
draw water from a shallower or discrete aquifer.
In Australia, our water monitoring program
involves measuring and monitoring water
levels and quality in previously-agreed pastoral
wells on neighbouring stations. Additionally,
we closely monitor in-use and surrounding
groundwater sources and report results to
relevant stakeholders. We conduct sediment
monitoring, including metal concentrations
and acidity, to detect any potential changes
in downstream surface water quality.
Our Brazilian assets are situated in the
Carajás Province with an annual rainfall
of over 2,286 millimeters per year.
Our Antas asset has a Water Resources
Management Program which aims to monitor
and evaluate surface and groundwater.
CAS E STUDY
ENERGY AND MINING COL L ABOR AT IO N (E M C)
In 2018, OZ Minerals embarked on an Energy
and Mining Collaboration (EMC) initiative with
Adelaide University, CSIRO, the Department
of Energy and Mining, the Rocky Mountain
Institute, SunSHIFT and the Tonsley Innovation
Precinct. The partnership is focused on
investigating demand for renewables adoption in
the mining industry in preparation for a possible
showcase of renewable energy integration.
The EMC facilitates collaboration between these
organisations to investigate renewable energy
and demand management related activities
on a mine site, with a view to developing and
identifying opportunities for an international
showcase that optimises electrical and fuel
demand and the integration of renewable
energy systems. This will be done via the
creation of partnerships focused on testing of
energy and technology hypotheses to unlock
transformational value in mining.
OZ MINERALS 83
Management approach
OZ Minerals Air Emissions
Performance Standard
ozminerals.com/about/corporate-
governance
Annual reporting obligation
National Pollutant Inventory (NPI)
Performance data
Air Quality Data Table, p. 97
Air Quality
The largest air quality emission from the majority
of our assets is dust. This is generated by
stockpiling materials and vehicles moving over
unsealed surfaces. We use a range of control
measures to reduce the amount of dust we
generate, including regular road maintenance,
active dust suppression on roads and speed
restrictions. Sampling at Prominent Hill and
Carrapateena has verified that our air quality
management has effectively prevented adverse
impacts on workers, the community and the
environment. There are no ozone-depleting
substances, persistent organic pollutants or
stack emissions produced at Prominent Hill or
Carrapateena. Air quality is also affected by
sulphur and nitrogen oxides that are generated
by burning fuels. Gases like carbon monoxide
and oxides of nitrogen are generated during
blasting. All assets monitor and manage
emissions via an Air Quality Management Plan
as per the Air Emissions Performance Standard.
Management approach
Waste and Wastewater Standard,
Waste Rock and Ore Standard,
and Tailings Standard
ozminerals.com/about/corporate-
governance
Performance data
Waste Data Table, p. 98
Waste and Tailings
OZ Minerals has three active tailings facilities
(Prominent Hill, Antas and Carrapateena). In
2019, all assets have had inspections undertaken
by independent and qualified geotechnical
engineering specialists with experience in the
design, operation and auditing of tailings dams.
Mining waste is managed onsite at Prominent
Hill, the Antas Mine in Carajás and the new
Carrapateena mine which is ramping up to full
production over a 12 month period following
first concentrate production.
Prominent Hill has one Tailings Storage Facility
(TSF) located within the Integrated Waste
Landform (IWL) which includes the Waste Rock
Dump (WRD). As an IWL, the TSF is surrounded
by a wide buttress of mine waste forming
the Southern WRD within which a clay-lined
perimeter embankment is constructed. The TSF
is constructed with the downstream construction
method. Over the reporting period, Prominent
Hill produced 951,000 tonnes of waste rock
and 8.8 million tonnes of tailings. No potential
acid-forming (PAF) material was mined. Most of
the waste rock generated is placed in the rock
dumps, with a proportion of non-acid forming
(NAF) rock used to construct mine infrastructure,
such as the tailings storage facility and roads.
When PAF rock is encountered, it is encapsulated
in designated PAF cells within the waste
landform. These PAF cells are then encapsulated
within NAF rock using physical control measures
to prevent surface water runoff and subsequent
environmental impacts.
The Carrapateena Mine Stage 1 is a cross valley
starter embankment. The initial lift (Stage 2)
has been constructed using a downstream raise
methodology with similar construction materials
to that of the starter embankment. Subsequent
raises (Stages 3 – 6) will be constructed using an
upstream raise methodology, using consolidated
tailings with waste rock armouring of the
downstream faces.
The Antas facility embankment has been
raised only once using the downstream
construction method.
Our tailings performance standard, which
applies across the company, sets out our
approach to managing waste within the TSF.
These standards are written to ensure the
TSF is designed, constructed and managed
to prevent seepage to groundwater.
As a part of our tailings management, we
conduct groundwater sampling to monitor
parameters such as depth to water, salinity, pH,
and metal concentrations at and surrounding
the TSF.
OZ Minerals’ Australian Tailings Storage Facilities
have been designed, constructed and operated
in accordance with ANCOLD (Australian
National Committee on Large Dams). In Brazil,
quality assurance and monitoring activities are
undertaken as normal course of business with
bi-monthly reporting provided to the Mines
Department (ANM).
MATERI AL RISK
TAILIN GS STORAG E FACIL ITY (TS F )
Tailings Storage Facilities are dynamic structures and maintaining their integrity requires
consideration of a range of factors, including appropriate engineering design, quality construction,
ongoing operating discipline, and effective governance processes.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 84
SUSTAINABILITY REPORT
CAS E STUDY
PROMINENT HILL RE CYCLI NG AN D WAS TE RE DUC T ION PR OG RA M
Performance
Recycled
Resource
Steel
Cardboard
Glass
Drink cans
Plastic
Tonnes recycled
July 2018 to June
2019
Waste management has been a priority environmental and community measure since Prominent
Hill started operations. Prominent Hill’s integrated waste management contract has been in place
since 2009 to reduce the amount of material entering landfill. During this time, the Environment
and Community team has worked with stakeholders to create value, directly and indirectly from
the management of this contract and service.
935
39
32
1
2
Our Prominent Hill team has partnered with AMY Environmental Services (AMYES), Prominent
Hill’s onsite waste contractors, since 2015. AMYES is 100% owned by the Traditional Owners,
the Antakirinja Matu Yankunytjatjara (AMY), and employs four full time operators and two trainee
waste operators from the local AMY community. The team leads best practice in recycling and
waste reduction through the development of a workplace culture that embraces waste reduction
and recycling practices into everyday operations. All materials are back-loaded to Adelaide for
processing and rebates are used to fund site-based social and environmental initiatives.
Management approach
Land and Biodiversity Standard
ozminerals.com/about/corporate-
governance
Performance data
Land and Biodiversity Table, p. 98
Land and biodiversity
In the development of the Prominent Hill mine,
OZ Minerals committed to the establishment
and management of a Significant Environmental
Benefit (SEB) offset area. The SEB is a parcel
of land, consisting of a portion of the Mt Eba
Pastoral Lease and the undisturbed areas
within ML 6228, an area of approximately
12,415 ha, minus project-related disturbances.
The objectives of the SEB offset area are to
support habitat by managing threatening
processes during Prominent Hill operations,
and the restoration of selected on-site areas,
cleared to enable mining activities.
Flora and fauna monitoring of the SEB offset
area has been continually undertaken since
2006 and has identified the presence of three
threatened species, the nationally-threatened
Plains Mouse and Thick-billed Grasswren (eastern
subspecies), both listed as vulnerable under
the Environment Protection and Biodiversity
Conservation Act 1999 (Cth), and the Chestnut-
breasted Whiteface listed as rare under the
National Parks and Wildlife Act 1972 (SA). All
three species are also listed in the International
Union for Conservation of Nature’s (IUCN)
Red List of Threatened Species. The extensive
monitoring program has allowed the vegetation
associations and preferred habitat of the
three species to be mapped. Currently, annual
vegetation monitoring is aimed at ensuring the
health of the preferred habitat is maintained.
At Carrapateena, the nationally-threatened
Plains Mouse occurs within the project area.
A further three species listed under the
National Parks and Wildlife Act 1972 (SA)
have been identified as occurring within or in
proximity to the project, including the plant
species Frankenia Subteres (rare), the Perigrine
Falcon (rare) and the Australian Bustard
(vulnerable). Two environmental offset areas
are established to support the Carrapateena
operation – a local on-ground offset on South
Gap Pastoral Lease for the management of
identified Plains Mouse habitat, and a larger area
on Witchelina Pastoral Lease to offset native
vegetation clearance associated with establishing
the Carrapateena project.
In the Carajas region, our teams have cultivated
a nursery to support the maintenance of local
biodiversity.
OZ MINERALS 85
CASE STUDY
NATURE FOUNDATION
OZ Minerals and Nature Foundation South
Australia first worked together for outcomes of
benefit to South Australia’s environment in 2012.
Since then, an innovative partnership has been
formed for the management of environmental
offsets required under the Environment
Protection and Biodiversity Conservation Act
1999 (Cth) (EPBC) and Native Vegetation Act
1991 (SA) as a result of ground disturbing
activities associated with our Carrapateena mine
and Hill to Hill transmission line project. The
partnership is designed to enable collaborative
arrangements between both parties
around the successful delivery of the EPBC
and Native Vegetation offsets, potential
carbon offsets, Carrapateena mine site land
management objectives and engagement
of the local pastoralists and Kokatha people
through projects to deliver conservation and
environmental outcomes. It ensures a long term,
robust focus on environment protection and
restoration that extends beyond the life of mine
at Carrapateena.
MATERI AL RISK
MAN AG ING AND PROTE CTING THE E NV I RON M EN T
There is growing pressure on and competition
for environmental resources, such as biodiversity,
water, and air. Our operations and growth
strategy depend on obtaining and maintaining
the right to access these environmental
resources.
OZ Minerals is committed to managing
environmental threats and impacts associated
with specific activities or tasks and to identify
opportunities that have the potential to drive
value creation for both OZ Minerals and the
communities in which we operate.
Management approach
Rehabilitation and Closure Standard
ozminerals.com/sustainability/
environment
Rehabilitation and closure
OZ Minerals’ South Australian operations have
documents and programs detailing closure,
including the Supporting Works Plan and
the Program for Environment Protection and
Rehabilitation (PEPR).
Progressive rehabilitation has been taking place
at Prominent Hill. Rock armouring of the North
Waste Rock Dump is now completed and the
South Waste Rock Dump is near completed with
the rock armouring of the TSF 80% completed.
The Supporting Works Plan is reviewed annually
to ensure closure assumptions are in line with
current operational activities. The documents
include rehabilitation and closure completion
criteria to achieve post-mining designated land
use and to minimise environmental liabilities.
Closure planning is updated throughout the
mine’s operational life to identify and reduce
risks and unknowns over time. As part of this
process, estimated costs of rehabilitating,
decommissioning and restoring the areas
disturbed during the operation of the mine
are evaluated and provided for.
Stakeholder engagement on mine closure occurs
throughout a mine’s life. The potential social
and environmental impacts of mine closure
are considered in our conversations with all
stakeholders. We support community initiatives
and sustainable local businesses as a part of our
community engagement program.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT Social Performance
Superior social performance
creates value for stakeholders
and supports our growth.
On Thursday 28 November 2019, OZ Minerals hosted
a Stakeholder Day that brought around 250 of our
stakeholders together at our Adelaide Airport office.
As Value Creation for our stakeholders is at the centre
of the OZ Minerals Strategy, the day was designed to
showcase examples of our value creation collaborations
that are already underway, and bring together shared
stories from OZ Minerals and stakeholders working
together to develop relationships with different people.
MATERI AL R ISK
Maintenance of community relations
and good title
OZ Minerals is committed to high standards of
stakeholder engagement and social performance
by its employees and contractors.
Building and maintaining strong supportive relationships
and partnerships with host communities in the areas
where we operate drives value creation for both the
business and communities.
The company seeks to deliver long-term benefits to local
communities and other stakeholders by engaging and
collaborating with local communities, understanding the
social impacts of our activities, and reducing the adverse
effects of our activities.
SU PPOR TIN G D OC UM EN T S
Environmental governance
Sustainability Committee Charter, Community
and Environment Policy
ozminerals.com/about/corporate-governance
Management approach
Governance Framework, p. 21
Environmental Performance Standards
ozminerals.com/sustainability/environment
Performance data
Environmental Data Tables, p. 97–98
CASE STUDY 87
Management approach
Stakeholder Engagement
Performance Standard
ozminerals.com/sustainability/
social
Performance data
Socioeconomic Data Table, p. 99
Stakeholder engagement
We seek to build and maintain strong, supportive
relationships with all stakeholders (shareholders,
suppliers, government, communities and
employees) in the host and local communities
where we operate.
Our assets have stakeholder engagement
programs that include engagement with
regulatory bodies, suppliers, government
agencies, communities, land owners, land
connected Indigenous and land connected
peoples including local landowners within the
sphere of influence of the operations and project
activities. This ensures input from the local
stakeholders and provides the opportunity for
us to understand the environmental, social and
economic implications of our projects.
We also engage with key special interest
groups and stakeholders who may potentially
be affected by the assets’ activities to better
understand stakeholder values and the potential
impacts. We provide accurate and fit for purpose
information in a timely manner, and anticipate
and proactively address community and
stakeholder issues and concerns as part of the
engagement process.
Mechanisms are in place to capture feedback,
complaints and grievances so they are promptly
and appropriately addressed. Our assets also
monitor and review major communication and
consultation activities to assess their effectiveness
and promote internal and external stakeholder
feedback.
Economic performance and socioeconomic contributions
Operating a sustainable and economically
successful company allows us to create
economic value for our stakeholders.
We make significant contributions to local,
regional and national economies directly
through the payment of taxes and royalties to
governments, income taxes, social investment,
dividends as well as payments to our workforce
and suppliers.
Our total economic contribution for 2019 was
$895 million and included:
/ more than $81 million in wages and benefits
/ $74.3 million in dividends to shareholders
/ $57.6 million in royalties and $64.7 million
in taxes.
Prominent Hill and Carrapateena significantly
contributed to local and regional economies.
Operationally, significant value is generated
through employment directly and through
our contracting partners, and investments
in community development initiatives and
programs. The direct benefits of our investments
include improved infrastructure, health, safety
awareness, education and training, and local
business development.
All of the 194 Carajás workforce are from
the local community.
More details are available in the Financial
Report (page 111) and in the socioeconomic
performance tables of this section of the report
(page 99).
Sponsorship
OZ Minerals Sponsorship Guidelines
ozminerals.com/sustainability
Performance data
Community Investment Data Table,
p. 99
Partners
thesmithfamily.com.au,
clontarf.org.au,
flyingdoctor.org.au
Community investment and sponsorship
We have contributed to a broad range of local
and regional programs. In addition to funding,
our employees and contract partners provided in-
kind assistance by donating time, expertise and
resources for community events and initiatives.
We supported locally-organised initiatives
that provide long-term benefits to our
host communities and are aligned with the
communities’ wishes. Our sponsorships and
community investment initiatives strive to
support organisations or projects to achieve
sustainable outcomes. We contributed
$533,000 in sponsorship to local organisations
and programs in 2019. Direct donations are
complemented by in-kind contributions and
an employee volunteering program.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 88
SUSTAINABILITY REPORT
CAS E STUDY
EDUCATING THE NE XT G ENE RAT IO N
OZ Minerals’ flagship corporate social
contribution program, Educating the Next
Generation, was launched in April 2019.
The program was designed to support our
local communities and enable our peoples’
involvement through volunteering or
mentoring with The Smith Family and
Clontarf Foundation over the next three years,
in addition to our continued support of the
Royal Flying Doctor Service.
Partnering with The Smith Family and Clontarf
Foundation, we hope to create something with
real impact that results in positive improvements
in the communities we are surrounded by and
work in.
What makes the flagship program special is
that it was developed in consultation with:
/ some of our community stakeholders –
who said the education of young people
was important to them
/ our people – many who expressed a desire
to make more than a financial contribution to
a cause, preferring to volunteer skills and time,
and even mentor through the company, and
make a difference at the grassroots level.
While the program is being implemented in
Adelaide, it was developed to be sustainable
and flexible enough to be extended into multiple
states and countries, and to complement the
localised donations and sponsorships already
delivered by our assets.
Continued support of
Royal Flying Doctors Service
OZ Minerals has been a proud and ‘major’
partner of the Royal Flying Doctor Service
(RFDS) Central Operations since 2007 when
the Prominent Hill copper-gold mine was still
in construction. In 2019, OZ Minerals and
RFDS renewed this longstanding partnership.
OZ MINERALS 89
External documents
Board of Taxation’s Tax
Transparency Code (TTC)
taxboard.gov.au
Performance data
Tax data table, p. 101
Management approach
Local Enterprise
Performance Standard
ozminerals.com/about/corporate-
governance
Performance data
Procurement Data Table, p. 99
Tax transparency
The Board of Taxation’s voluntary Tax
Transparency Code (TTC) was endorsed by
the Australian Government in 2016 and is
designed to encourage greater transparency
within the corporate sector of its compliance
with Australian tax laws. OZ Minerals supports
the initiative to ensure Australian businesses
and subsidiaries of multinational companies
operating in Australia pay tax on their
Australian profits, as required under
Australian tax law.
OZ Minerals formally registered with the
Board of Taxation’s TTC in 2019 and present
the following information in accordance with
the TTC:
Tax governance
The objectives of OZ Minerals tax risk
management includes the prevention of
disputes with tax authorities leading to adverse
reputational consequence, compliance with
regulatory requirements and maximising
shareholder value. OZ Minerals seeks to adopt a
low tax risk position to ensure potential impacts
to the Group are maintained at insignificant
levels for tax exposures across its global business.
While OZ Minerals is entitled to certain tax
concessions in the ordinary course of its business,
it has no appetite to seek concessions that are
motivated by the avoidance of tax.
Australian tax-related
contribution summary
A summary of OZ Minerals’ 2019 employee
and tax related contributions, to State and
Federal tax authorities, is provided in the
performance data tables on page 101.
Local enterprise and procurement
We seek to create enduring and sustainable
value for our host communities, states and
territories associated with our assets and source
local employees and suppliers where possible.
We preferentially purchase goods and services
locally, within the region or within the state
where we operate. National or international
procurement is only considered when local
procurement is not available or not competitive.
We also help local businesses understand our
pre-qualification processes and procurement
standards. Local and Indigenous and land
connected peoples are encouraged to apply
for positions and tender for business
opportunities with our assets.
Our activities contributed $361.6 million to
South Australian regional and local suppliers
and contractors. These figures do not include
wages and salaries paid to major contractors or
expenditure by contractors in the local region.
Our greatest supply impact is through
contracting mining and other services.
The largest material inputs include diesel fuel,
explosives, grinding media used in the processing
plant, and cement used in the underground
mine. These materials are sourced from large,
reputable organisations with operations in
Australia.
The Kokatha Aboriginal Corporation (KAC) is
the organisation of native title holders for the
area encompassing a significant portion of the
Far North of South Australia, including Roxby
Downs and the Carrapateena Mine. In 2017,
OZ Minerals and KAC established Kokatha
Mining Services (KMS) a 100% KAC-owned
business at Carrapateena that operate machinery
including water carts and graders as part of the
Carrapateena development activities
The result of the partnership was the
establishment of a road maintenance business
and was awarded the Carrapateena Access Road
maintenance in December 2019. This long term
contract will allow the KAC and Carrapateena to
leverage future long term business opportunities
at Carrapateena, beyond the Carrapateena
mine and outside of the resource industry. This
continuous improvement philosophy extends
to the partnering model currently in place within
OZ Minerals.
Our Brazilian assets have a high level of local
procurement.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 90
SUSTAINABILITY REPORT
Total spend on suppliers by region
Total
$1.4 billion
Australia
$1.3 billion
South
Australia
$362 million
International 4%
Australia 96%
National 73%
South Australia 27%
Regional 7%
Local 93%
CAS E STUDY
GMUSG PARTNERIN G PE RFO RM ANCE – C AR RAPAT EEN A P RO JE CT
OZ Minerals is committed to prioritising
sustainable local procurement and employment,
with particular attention on the Upper Spencer
Gulf, an Outback Community. Since 2016,
OZ Minerals has partnered with Global
Maintenance Upper Spencer Gulf (GMUSG)
to drive local content activities, facilitating
connection of local businesses to the
Carrapateena supply chain. We have actively
facilitated lead contractor introductions to local
suppliers and businesses, which has resulted in
a number of Indigenous and local contractors
and suppliers being engaged onsite.
Carrapateena’s Australian Industry Participation
Plan requires relationships to be fostered with
key regional stakeholders, providing business
and employment opportunities directly, and
through our major contractors who are critical
stakeholders for the project.
Carrapateena Performance
/ As of November 2019, 191 Carrapateena
Work Packages have been advertised on the
Industry Capability Network (ICN) supplier
portal with 1,825 Expressions Of Interest
received, approximately 40% of which
were from South Australian Businesses.
/ Of the $871.3 million currently committed
on the Carrapateena project, 97.7% has
been to Australian Entities.
/ Australian Industry Participation Plan (AIP)
data reported by our contractors shows
cumulative contract value spent in South
Australia by contractors increased to
$236 million as of November 2019.
/ AIP data also showed cumulative contract
value spent in the Upper Spencer Gulf by
contractors increased to $41.9 million as
of November 2019.
OZ MINERALS 91
Management approach
ozminerals.com/sustainability
Land-connected and Indigenous peoples
Voice Treaty Truth
We recognise Aboriginal and Torres Strait
Islander Peoples as the first people of Australia
and the importance to all of us for their voice
to be heard. We support efforts being made to
achieve this next step in National Recognition.
In support of the principles of Voice, Treaty and
Truth, we undertake to continue working with
our traditional owner partners in the spirit of
shared value and mutual obligation to create
sustainable benefits by leveraging, developing
and building on our shared aspirations, while
protecting and respecting country and culture.
Our commitment is enshrined in our
partnering agreements
/ Kokatha Aboriginal Corporation and
Carrapateena Mine - Nganampa palyanku
kanyintjaku ‘Keeping the future good for
all of us’
/ Antakirinja Matu-Yankunytjatjara Aboriginal
Corporation (AMYAC) and Prominent Hill Mine
- Tjunguringanyi – tjaku “Coming together”
We recognise and respect the unbroken cultural
connection and cultural authority of Aboriginal
and Torres Strait Islander Peoples in Australia.
A value creation and partnering approach
focused on building mutual respect and
knowledge to recognize genuine partnership
with land-connected Aboriginal and Torres
Strait Islander peoples is built on trust,
respect and integrity. It allows us to build a
common understanding and language, identify
opportunities, learn from each other and
work towards shared goals. A comprehensive
understanding of the culture and social structure
of host communities is required to ensure
respectful, inclusive and effective engagement.
Each asset has people dedicated to regular
liaison with Indigenous communities.
The requirements regarding engagement with
Indigenous communities are set out in the
Land-Connected and Indigenous Peoples
Performance Standard. In line with the Standard,
each asset must operate in accordance with the
principles of the UN Declaration of the Rights
of Indigenous Peoples (UNDRIP).
Our partnering approach with Indigenous and
land-connected people is based on principles
of equality, transparency and mutual benefit.
It respects and protects the rights of Indigenous
People and is in line with the values of Free Prior
and Informed Consent (FPIC).
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 92
SUSTAINABILITY REPORT
Management approach
Land-connected Indigenous Peoples
Performance Standard, Cultural
Heritage Performance Standard
ozminerals.com/about/corporate-
governance
Voice Treaty Truth
ozminerals.com/sustainability/
voice-treaty-truth
Cultural heritage
We collaborate and partner with land connected
and Indigenous peoples to provide context
specific and fit for purpose cultural heritage
and awareness training, and information on
how to avoid damage to cultural heritage
along with project obligations and requirements.
Cross-cultural awareness training programs are
offered to all contractors and employees and
they are encouraged to attend.
The training includes raising awareness on
heritage and artefact finds and working in
areas of cultural significance.
CAS E STUDY
WEST MUSGRAV E RANGE R CO L LAB O RAT I ON
Between September and December 2019,
the Ngaanyatjarra Council’s Blackstone Ranger
team undertook a regional survey for Tjakura
(Great Desert Skink-Egernia kintorei) in the areas
surrounding the West Musgrave Project. Tjakura
is listed under the Commonwealth Environment
and Biodiversity Conservation Act 1999
(Comm EPBC Act) and the Western Australian
Biodiversity and Conservation Act 2016 (WA
BC Act) as Vulnerable. The work was undertaken
to identify whether a future copper and nickel
project at West Musgrave may present any
impact to this species.
This engagement represents one of the most
significant engagements of the Blackstone
Ngaanyatjarra Ranger team by stakeholders
external to the Ngaanyatjarra Lands. This type
of work leverages the Ngaanyatjarra Traditional
Owners’ deep knowledge of the regional
landscape, and the biodiversity within it. This
is seen by local people to represent valuable
work for the preservation and documentation
of their environments.
Through this, the Blackstone Ngaanyatjarra
Ranger team identified a further seven regional
populations of Tjakura, representing a nationally
important find given that the species was
considered to be rare. These finds also confirm
a potential future project presents minimal risk
to the viability and persistence of this species.
OZ MINERALS 93
Management approach
Ethics and Human Rights
Policy and the Human Rights
Performance Standard
ozminerals.com/about/corporate-
governance
Human rights
Our internal governance is guided by
international guidelines, including the UN
Guiding Principles on Business and Human
Rights, United Nations Universal Declaration
on Human Rights, Voluntary Principles on
Security and Human Rights (VP), International
Labour Organisations (ILO) Conventions and
the International Council on Mining and Metals
(ICMM) principles. We further reinforce our
expectations of employees through our Code
of Conduct. We have a variety of programs to
promote compliance and ethical business. Asset
induction training raises awareness of human
rights responsibilities with senior management,
employees, contractors (particularly security
personnel), and other stakeholders in the asset’s
sphere of influence. From time to time, we also
provide our employees with training on topics
covered within the human rights standards.
Maintaining and improving our systems and
processes helps to minimise the risk of human
rights violations in our operations or in our
supply chain.
Modern Slavery Act
We seek to address the risk of modern slavery
in our operations and supply chains and comply
with the Modern Slavery Act 2018 (Cth).
Currently, we are working with our supply
chains to meet the new reporting obligations.
MATERI AL RISK
HUMAN RIG HT S AN D E THIC S
OZ Minerals’ activities are exposed to human
rights, ethics, and social well-being expectations.
Our operations and supply chain are subject
to human rights, ethics, and employment
conditions, which may vary from time to time.
The company recognises the potential for human
rights exposures and risks in all jurisdictions and
is committed to working broadly to promote
respect through stakeholder engagement,
collaboration, advocacy, and contribution to
public policy development.
Anti-bribery and corruption
We carried out an internal audit of our
Anti-Bribery and Corruption Standard and its
processes and procedures. The internal audit
involved a risk assessment, gap analysis, review
of the anti-bribery and corruption compliance
materials, and company integration of the
compliance program, including within our
Brazilian assets. The primary purpose of the
internal audit was to identify the bribery and
corruption compliance risks we face, how
these risks are currently managed and what
improvements could be made to the
governance and compliance framework.
Online training was provided to all our
employees.
The OZ Minerals public and internal facing
Anti-Bribery and Corruption material was
updated in 2019.
The OZ Minerals public-facing ‘Whistleblower’
material has been released as ‘Speak Up’
following updates in line with the Australian
Whistleblower Legislation introduced in 2019.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT Health & Wellbeing
OZ Minerals is committed to high standards of health and
wellbeing among our people. We are focused on leadership,
a supportive workplace culture, building capabilities,
implementing prevention controls and promoting the
return to work of affected individuals.
CentroGold apprentices undergo
training at Antas Norte
OZ Minerals has a strong commitment to education
and training for host communities. In June 2019, young
apprentices from our CentroGold project travelled to the
Antas mine, 1,600 km away, to undertake three months
of onsite workplace training. The eight apprentices
participated in onsite training designed to provide an
authentic experience and support them in understanding
the company’s culture, standards and safety policies.
The training blended theoretical teachings and practical
application of that knowledge into activities to be
developed in the project located in Maranhão.
“Our job was to bring qualifications training to these
young people living in the Centro Novo (MA) community,
home to the CentroGold project, and to provide
experience in the mining environment. As such we hope
they can take quality information to the community they
live in,” said Polyanne Lima, Human Resources Supervisor.
MATERI AL R ISK
Attracting and Retaining Talent
OZ Minerals competitive advantage lies in its agile
and innovative culture. Attracting and retaining great
people with the right skills and behaviours both now
and for the future is core to our success.
SU PPO RT ING D O CU ME NTS
Management approach
Stakeholder Value Creation Policies
ozminerals.com/about/corporate-governance
Health and wellbeing standards
Medical Programs, Occupational Exposure
Control, Fitness for Work, Lone Workers
and Remote Travel, Hazardous Materials
ozminerals.com/sustainability/health-and-
wellbeing/
CASE STUDY 95
Management approach
Fitness for Work Performance
Standard, Medical Programs
Performance Standard
ozminerals.com/about/corporate-
governance
Health and wellbeing programs
Our people’s health and wellbeing are important
to us. People with a strong sense of wellbeing
are more engaged at work and are better for
their communities and families. In 2019, we
implemented a number of programs to promote
and support physical, mental, social and
emotional health and wellbeing. We also actively
promoted flexible working arrangements for
our people, allowing them to work in ways that
support their commitments outside of work.
Our fitness-for-work program includes a wide
range of activities and education in fatigue
management, employee assistance programs,
role-based assessments, fitness, and drug and
alcohol programs. We provide our people with
the necessary education and information to
self-manage their fitness-for-work.
We value the continued development of an
inclusive culture where people can openly talk
about mental health. In 2019, we implemented
several preventative programs to support
mental wellbeing. This included incorporating
mindfulness through the Smiling Mind Program
in the Adelaide Office. The team at Carrapateena
worked with an external partner to deliver
training that raised awareness of mental health.
Both Prominent Hill and Carrapateena assets
have developed mental health initiatives in order
to raise awareness of mental health and suicide
prevention. Over 300 people have participated
in the Carrapateena mental health awareness
sessions with 50 personnel completing mental
health first aid training.
OZ Minerals continues to offer an employee
assistance program (EAP) with free, professional,
and confidential counselling to all employees,
contractors and their immediate family members.
The EAP is provided through a leading global
health and wellness company and provides
access to a network of accredited counsellors
and psychologists that can support with both
work and personal issues.
Throughout the year, OZ Minerals provided
free medical check-ups, skin cancer checks,
flu-vaccinations and health education classes.
Our people also have access to corporate
health plans and income protection.
Business ethics and ethical conduct training
The Code of Conduct is our highest order
of corporate governance and outlines the
importance of – and our commitment to –
maintaining an open working environment
so our employees and contractors can report
instances of unethical, unlawful or undesirable
conduct without fear of intimidation or reprisal.
We have appointed STOPline as the disclosure
line to report unacceptable conduct
confidentially and anonymously under the
‘Speak Up’ (Whistleblower) Policy. STOPline
ensures best practice and the highest level
of independence, as well as impartiality and
confidentiality in the receipt and management
of concerns relating to unacceptable conduct.
STOPline offers a simple and highly confidential
solution to the difficult issues of ethics,
compliance, risk management and corporate
governance.
Our mandatory online training courses reinforce
our Code of Conduct and the information in our
policies. We provide training and education on
key legal and ethical risk areas.
Our employees enrol in online learning courses
that include our equal employment opportunity
program and ethics and conduct program, as
well as an anti-harassment and bullying program.
Each program includes awareness training based
on site-specific needs.
Our interactive online induction program further
reinforces our Code of Conduct, policies and
performance standards.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 96
SUSTAINABILITY REPORT
Performance date
Employment Data Table, p. 102
Training and development
We are committed to ensuring our employees
have access to career development while
working at OZ Minerals. It is mandatory for
each employee to have a development plan in
place to support their career aspirations. This
year, employees across the company undertook
secondments to different areas of the business,
participated in mentoring and coaching
programs and attended formal training and
conferences.
Our Leadership Development Programs focus on
developing exceptional leaders who are inclusive,
collaborative and innovative. Our How We Work
Together principles and behaviours provide the
foundation of how we conduct our activities.
This year our workforce undertook 30,642 hours
of employee training, mostly at Prominent Hill
and Carrapateena. Training across the company
spans inductions, safety, business ethics, role
specific, technical, and compliance training,
designed to lift the capability of our workforce.
CAS E STUDY
MARCILIO RO CHA – EXP L ORAT IO N G E OL O GI ST, BR AZ IL
Marcilio Rocha – Exploration Geologist, Brazil
spent six weeks in Australia working with the
Austalian team as part of the Explorer Challenge
drilling program around Prominent Hill.
“I learned so much from so many people during
my time there and I will share and apply what
I’ve learned with other people here in Brazil.
This is How We Work Together,” Marcilio said.
Through this development program, we hope to
promote development, knowledge sharing and
collaboration between our global assets.
Management approach
Diversity and Inclusion Policy
ozminerals.com/about/corporate-
governance
Performance date
Diversity Data Table, p. 102
Diversity and inclusion
We are committed to developing an inclusive
culture where people are treated fairly and
respectfully, where they feel valued and have
a sense of belonging. This includes creating
a psychologically safe work environment that
empowers each person to contribute and
express their ideas.
We focus on, and continue to support, diversity
for under-represented groups and provide equal
access and opportunity for all people regardless
of age, gender, race, national or ethnic origin,
cultural background, experience, social group,
marital status, religion, language, political beliefs,
sexual orientation or physical ability. Several
strategies are in place to increase the level of
inclusion, demographic diversity and diversity
of thought.
The participation of women, Indigenous
peoples and a multi-generational workforce
continues to be measured.
Women make up 21% of the workforce directly
employed by OZ Minerals, with the Board
and senior leadership having >30% female
representation. There are approximately 193
Aboriginal people working at Prominent Hill and
Carrapateena (as employees and contractors) –
representing 6% of our Australian workforce,
one of the highest representations of Aboriginal
people within Australian mining workforces.
Equal remuneration is offered for all our
employees, reflective of the type of job,
years of experience and the period for which
employees have held their position. This
continues to be annually reviewed to provide
assurance that our employees’ remuneration
remains equitable and in line with market trends.
OZ MINERALS 97
Sustainability performance data
Figures exclude West Musgrave, as the project was under the operational control of Cassini Resources for the reporting period.
Safety and Environment tables exclude the Carajás.
Safety
Safety performance
Employee fatalities
Contractor fatalities
TRIFR (employees and contractors)
LTIFR (employees and contractors)
Significant safety incidents(a)
(a) As defined by OZ Minerals internal classification.
Environment
Energy
2019
0
1
7.52
1.54
38
2018
0
0
7.24
0.93
63
2017
0
0
6.39
0.36
65
2016
0
0
6.80
1.07
71
2015
0
0
5.30
0.90
61
Energy consumption (GJ) 2018-2019
Energy consumed
Energy produced
Energy consumed (net)
Prominent Hill
Carrapateena
Group office
Total
Emissions
1,836,444
574,367
811
2,411,622
400
38,180
0
38,580
1,836,044
536,187
811
2,373,042
Total direct and indirect emissions
2018-2019
2017-2018
2016-2017
2015-2016
2014-2015
Greenhouse gas emissions Scope 1 (t CO2-e)(a)
Greenhouse gas emissions Scope 2 (t CO2-e)(b)
Total of Scope 1 and Scope 2 (t CO2-e)
Sulphur Hexafluoride SF6 (t CO2-e)
Oxides of nitrogen (t)
Sulphur dioxide (t)
Total volatile organic compounds (VOC) (t)
Particulate matter < 10 um (t)
77,271
176,627
253,898
16
783
0.46
52
2,316
85,258
167,980
253,238
11
632
0.45
35
2,180
105,648
177,306
282,954
11
342
1.30
108
3,310
142,669
190,825
333,494
11
994
0.85
52
4,488
180,290
199,209
379,499
11
1,242
1.11
86
5,899
Note: The reporting period is July 2018 to June 2019 and is for Australian assets only. The energy and emissions boundary is based on operational control as defined by the National Greenhouse and
Energy Reporting (NGER) Act 2007. The applied global warming potential (GWP) rates and emission factors are based on the NGER Act (2007) and the National Pollutant Inventory.
(a) Scope 1 refers to emissions produced directly by operations, primarily resulting from combustion of various fuels and includes CO2-equivalent values for greenhouse gases such as CH4, N20 and SF6.
(b) Scope 2 refers to indirect emissions resulting from the import of electricity from external parties; commonly the electricity grid.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 98
SUSTAINABILITY REPORT
Water withdrawal
Water withdrawal
Surface (ML) water
2019 calendar
Prominent Hill
Carrapateena
Total
Water discharge
Water discharge (ML)
2019 calendar
Prominent Hill
Carrapateena
Total
Waste
Mineral waste
2019 calendar
Prominent Hill
Carrapateena
Total
Surface
water
Groundwater
(mine dewatering)
Groundwater
(wellfield)
Rainwater
Municipal
water supply
Total
recycled
% Total
recycled
0
0
0
464
521
985
5,783
490
6,273
0
0
0
0
5
5
315
0
315
5%
0%
4%
Subsurface
Surface
Sewers
Land (dust suppression)
Land
Treatment facilities
Groundwater
0
0
0
0
0
0
0
0
0
241
533
774
0
48
48
0
3.7
3.7
0
0.5
0.5
Overburden &
waste rock (t)
951,444
1,352,765
2,304,209
Material moved (t)
Total ore mined (t)
Liquid fossil fuels (kL)*
Lubricants (kL)*
Explosives (t)*
4,317,376
1,653,405
5,970,781
3,365,932
300,640
3,666,572
13,847
13,004
26,851
562.9
193.0
755.9
1,607.5
1,550.3
3,157.8
*The reporting period for Liquid fossil fuels, lubricants and explosives is July 2017 to June 2018 and reported as part of the National Pollutant Inventory.
Non-mineral waste
Non-mineral waste
2019 calendar
Prominent Hill
Carrapateena
Total
Solid recycled (t)
Liquid recycled (l)
Landfill (t)
Incineration (t) On-site storage (t) Hazardous transported (t)
1,009.0
111.6
1,120.6
44,744.0
484.9
0
1,683.8
44,744.0
2,168.7
195.0
0
195.0
0
0
0
7.5
312.3
319.8
Rehabilitation and closure
Land management (ha)
2019 calendar
Prominent Hill
Carrapateena
Total
Environmental compliance
Total volume of significant spills (L)
Monetary value of significant fines ($A)
Total landholding
Mine footprint
Land disturbed
Land rehabilitated
11,401
44,144
55,545
2,039.0
1,094.2
3,133.2
0.6
664.2
664.8
1.1
61.8
62.9
1,758,100
0
OZ MINERALS 99
Social
Socioeconomic contribution
$millions
Operations
Employees
Payments to
providers of capital
Payments to
government
Community
investment
Region
Operating
expenses
Employee
benefit
expenses(b)
Dividend
payments to
shareholders
Providers
of funds
Income
taxes
expense(b)
Royalties(b)
Community
investments
Total
economic
contribution
Revenues
Revenue,
other income
and financing
income(b)
Economic
value
retained
South
Australia(a)
Brazil
Total
OZ Minerals
(511.4)
(80.7)
(74.3)
(2.3)
(66.2)
(57.6)
(0.5)
(793.0)
1,046.1
253.1
(101.6)
(613.0)
(1.0)
(81.7)
0.0
(74.3)
0.0
(2.3)
1.5
0.0
(64.7)
(57.6)
0.0
(0.5)
(101.1)
(894.1)
66.2
1,112.3
(34.9)
218.2
Overview revenues
Overview community investment
Categories
Revenue
Other income
Financing income
Total
Overview operating expenses
Categories
Changes in inventories
Raw materials
Exploration and evaluation
Freight expenses
Net foreign exchange
Other expenses
Total
$millions
Categories
1,107
Community appeal
0
5
Education
Health
1,112
Industry
Total
Procurement
$millions
(142.8)
Region
(256.2)
South Australia – local
(93.9)
(80.5)
South Australia – total
Australia – total
1.0
International – total
(40.6)
Total
(613.0)
$
176,000
220,000
100,000
37,000
533,000
$millions
26.7
361.6
1,336.6
57.2
1,393.8
(a) Amounts are divided into the regions identified below based on where the segment is located (i.e. Prominent hill is located in South Australia). The regions include the following entities:
South Australia: Corporate Office, Prominent Hill Mine, Carrapateena; Overseas: Brazil. The entities located outside Australia are not defined as operating segments of OZ Minerals
(b) As disclosed in the income statement of the OZ Minerals audited financial statements for the year ended 31 December 2019.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 100
SUSTAINABILITY REPORT
Stakeholder engagement
Stakeholder group
About the stakeholder
Engagement
Shareholders
Retail and institutional shareholders.
Annual General Meeting, Annual and Sustainability Reports, Quarterly
Reports and webcasts, website (where all releases and other information on
OZ Minerals is maintained and regularly updated), and investor presentations.
Investment
community
Customers
Employees
Lenders, mainstream brokers, financial analysts and
fund managers, sustainability and ethical investment
analysts, retail investment advisers, existing and potential
shareholders, both domestically and internationally.
Annual General Meeting, Annual and Sustainability Reports, Quarterly Reports
and webcasts, ASX releases, website, direct phone contact with investor
relations, presentations at industry conferences, briefings and site visits,
investor presentations.
Smelters, refiners and downstream copper product
fabricators around the globe. With a key interest in product
quality and a greater awareness of global labour issues,
human rights and downstream product safety due to the
nature of their business.
Regular formal and informal communication with marketing department
employees. Personal visits by marketing department and process management
employees. Site visits to customer plants and customer representatives
encouraged to visit OZ Minerals’ operations. Production of parcels as per
customer specifications.
Employees are commute to assests, fly-in fly-out in
Australian and bus-in bus-out in Brazil. Employees are
covered by collective bargaining agreements. Key topics
for employees include occupational health and safety,
employment, diversity and equal opportunity, training
and education, and personal wellbeing.
Regular communication with employees through presentations and
discussions, the intranet, email alerts, hard copy newsletters, noticeboard
items and a regular electronic letter from the CEO.
Refer to the safety, and health and wellbeing section for information
about our safety programs.
Suppliers
From local businesses to large international organisations.
Regular meetings with commercial and operational employees.
Industry
associations
Other mining
companies
and academia
Communities
Mining and minerals industry.
Representatives on boards and committees, engagement on specific projects.
Other mining companies, mining regulators, industry
associations and minerals industry academics, and
industry alliances.
Papers and presentations given by executives at various industry-related
conferences. Location-specific industry meetings, informal communication
and working groups.
Individuals and groups local to our operations, including
landowners, traditional owners, development groups,
local businesses and councils.
Location-specific community relations personnel, community meetings,
formal and informal communications, as well as social media.
Non-government
organisations
Local, regional and international environmental,
human rights, development, corporate social
responsibility and sustainability organisations.
Liaise directly with operational management, environment and community
relations departments on specific issues. Annual and Sustainability Reports
and media releases.
Media
Print, radio, television and online platforms.
Dedicated media relations function. Regular engagement with business and
regional media through teleconferences, regular one-on-one discussions,
interviews, ASX releases, media releases and site visits.
Governments
Local, state and national regulators and government
agencies.
Regular formal and informal communications with operational senior
management and employees through site visits, meetings, events and
reporting.
OZ MINERALS 101
Tax
Australian tax-related contribution summary
$millions
Reconciliation to income tax payable*
Corporate income tax*
Government royalties
State payroll taxes and other
Total
Employee PAYG
44.1
57.6
4.8
106.5
26.9
Profit before income tax expense
Permanent differences
Temporary differences
– Difference in accounting and tax depreciation
*Corporate Income Tax represents cash outflows in 2019 in relation to the following:
/ Income tax receipt for December 2019 totaling net $0.9 million ($1.8 million installment
offset by $2.7 million refund)
/ Monthly PAYG installments paid during the 2019 income year totaling $45.0 million
Reconciliation of accounting profit to income tax expense
$millions
– Provisions and accruals
– Derivatives
– Exploration deductions
– Leases
– Other
Accounting profit before income tax expense
Tax at Australian tax rate of 30%
Variation in overseas tax
Non deductible expenditure
Revision for prior periods
Recognition of previously unrecognised tax losses
Derecognition of overseas losses
Income tax expense
228.6
(68.6)
0.1
(14.1)
1.5
17.8
(1.4)
(64.7)
Global & Australian
effective tax rate
Global
($millions)
Australia
($millions)
Accounting (loss)/profit before
income tax expense
Income tax expense
Effective tax rate
228.6
(64.7)
28.3%
270.0
(66.2)
24.5%
Taxable income before utilisation of carried forward
restricted tax losses
Utilisation of carried forward restricted tax losses
Taxable income after utilisation of carried forward losses
Australian income tax payable
PAYG installments to December 2019
Net income tax payable post PAYG installments
* Figures exclude all foreign jurisdictions due to resulting tax losses in those jurisdictions.
Amounts reflect current tax payable in Australia only for the December 2019 income year.
International related party dealings
In addition to the above disclosures, the TTC also requires disclosure of international
related party dealings. For the year ended 31 December 2019, OZ Minerals had
immaterial dealings with international related parties in Brazil and Peru, limited to
the following:
/ The provision of technical services (Brazil and Peru)
/ Intercompany loans to fund exploration and feasibility studies (Brazil and Peru).
31 December 2019
($millions)
270.0
11.9
(77.3)
3.9
29.8
(26.2)
(4.2)
(5.5)
202.4
(24.1)
178.3
53.5
(45.0)
8.5
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 102
SUSTAINABILITY REPORT
Health and wellbeing
Diversity
Profile 2019
Full time
Part time
Fixed term
Casual
Employees
Contractors
Aboriginal Workforce
Australia
Brazil
Total
M
405
170
575
F
96
24
120
M
0
0
0
F
5
0
5
M
22
0
22
F
9
0
9
M
7
0
7
F
2
0
2
Total
M
F
Total
Total
546
194
740
2,182
296
2,478
0
0
0
2,182
296
2,478
193
0
193
New employees 2019
Age group <36
Age group 36–55
Age group >55
Australia
Brazil
M
85
22
F
20
6
M
95
30
F
24
0
M
10
1
Turnover 2019
Age group <36
Age group 36–55
Age group >55
Australia
Brazil
M
6.9%
10%
F
5.4%
8%
M
12.2%
8%
F
14.3%
0
M
25.0%
0
Combined employee diversity at OZ Minerals
F
3
0
F
10.0%
0
Total
3,024
194
3,218
Total
237
59
Total
10.8%
16%
Under 30 years old
30–50 years old
Over 50 years old
Female
Aboriginal
Business leadership and
Functional Leadership
Department
Managers
Superintendents/
Senior Specialists
Tertiary/Supervisor
Individual contributors
60%70%80%90%40%50%30%10%0%20%OZ MINERALS
103
Conclusion
Based on the
evidence we obtained
from the procedures
performed, we are
not aware of
any material
misstatements
in the Selected
Sustainability
Information, which
has been prepared by
OZ Minerals Limited
in accordance with
the GRI Standards
for the year ended
31 December 2019.
Independent Limited Assurance Report
to the Directors of OZ Minerals Ltd
Information Subject to Assurance
The Selected Sustainability Information, as presented in the 2019 Sustainability Report on pages
70 to 102 of the OZ Minerals Ltd (the “Company”) Annual Report 2019 (the “Sustainability Report”)
and available on OZ Minerals Ltd’s website, comprised the following:
Selected Sustainability Information
Value assured
Fatalities
Total Recordable Injury Frequency Rate (TRIFR)
Lost Time Injury Frequency Rate (LTIFR)
1
7.52
1.54
Greenhouse gas emissions Scope 1 (t C02-e) July 2018 – June 2019
77,271
Greenhouse gas emissions Scope 2 (t C02-e) July 2018 – June 2019 176,627
Energy consumed (GJ)
Energy produced (GJ)
Total water withdrawal – sum of Groundwater (mine dewatering)
and Groundwater (wellfield) (ML)
2,411,622
38,580
7,258
Climate change, energy use and greenhouse gas emissions section
of the Sustainability Report presented on pages 81 to 82
Not applicable
Criteria Used as the Basis of Reporting
The criteria used in relation to the Sustainability Report content are the GRI Standards published
by the Global Reporting Initiative (GRI) and Company specific definitions.
Basis for Conclusion
We conducted our work in accordance with Australian Standard on Assurance Engagements
ASAE 3000 and ASAE3410 (the Standards). In accordance with the Standards we have:
/ used our professional judgement to plan and perform the engagement to obtain limited assurance
that we are not aware of any material misstatements in the Selected Sustainability Information,
whether due to fraud or error;
/ considered relevant internal controls when designing our assurance procedures, however we do
not express a conclusion on their effectiveness; and
/ ensured that the engagement team possess the appropriate knowledge, skills and professional
competencies.
Summary of Procedures Performed
Our limited assurance conclusion is based on the evidence obtained from performing the
following procedures:
/ enquiries with relevant OZ Minerals Ltd personnel to understand the internal controls,
governance structure and reporting process of the Selected Sustainability Information;
/ reviews of relevant documentation;
/ analytical procedures over the Selected Sustainability Information;
/ site visits to Corporate Head Office (Adelaide), Prominent Hill and Antas mine sites;
/ walkthroughs of the Selected Sustainability Information to source documentation;
© 2020 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with
KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered
trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 104
SUSTAINABILITY REPORT
/ agreeing the Selected Sustainability Information included in the Sustainability Report to
relevant underlying sources on a sample basis;
/ an assessment that the indicators reported were in accordance with the GRI Standards; and
/ reviewing the Sustainability Report in its entirety to ensure it is consistent with our overall
knowledge of the Company.
How the Standard Defines Limited Assurance and Material Misstatement
The procedures performed in a limited assurance engagement vary in nature and timing from, and
are less in extent than for a reasonable assurance engagement. Consequently the level of assurance
obtained in a limited assurance engagement is substantially lower than the assurance that would
have been obtained had a reasonable assurance engagement been performed.
Misstatements, including omissions, are considered material if, individually or in the aggregate, they
could reasonably be expected to influence relevant decisions of the Directors of OZ Minerals Ltd.
Use of this Assurance Report
This report has been prepared for the Directors of OZ Minerals Ltd for the purpose of providing an
assurance conclusion on the Selected Sustainability Information and may not be suitable for another
purpose. We disclaim any assumption of responsibility for any reliance on this report, to any person
other than the Directors of OZ Minerals Ltd, or for any other purpose than that for which it was
prepared.
Management’s responsibility
Management are responsible for:
/ determining that the criteria is appropriate to meet the needs of intended users, being
OZ Minerals Ltd and their stakeholders;
/ preparing and presenting the information subject to assurance in accordance with the criteria.
This includes disclosing the criteria, including any significant inherent limitations;
/ establishing internal controls that enable the preparation and presentation of the information
subject to assurance that is free from material misstatement, whether due to fraud or error;
/ advising us of any known and/or contentious issues relating to the information subject to assurance;
and
/ maintaining integrity of the website.
Our Responsibility
Our responsibility is to perform a limited assurance engagement in relation to the Selected
Sustainability Information for the year ended 31 December 2019, and to issue an assurance
report that includes our conclusion.
Our Independence and Quality Control
We have complied with our independence and other relevant ethical requirements of the Code
of Ethics for Professional Accountants issued by the Australian Professional and Ethical Standards
Board, and complied with the applicable requirements of Australian Standard on Quality Control 1
to maintain a comprehensive system of quality control.
KPMG
Julia Bilyanska
Director
18 February 2020
© 2020 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with
KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered
trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
OZ MINERALS Mineral
Resources and
Ore Reserves
106
MINERAL RESOURCES & ORE RESERVES
Mineral Resources
and Ore Reserves
OZ Minerals’ updated Minerals Resource and Ore Reserve estimates are released as of 30 June
each year, or as necessitated by material changes to projects. Significant increases have been
made due to changes in OZ Minerals’ portfolio throughout 2019, with the change in reporting for
the Carrapateena Mineral Resources and the addition of several new estimates as a result of the
integration of the Brazilian assets.
OZ Minerals’ Group Mineral Resources are estimated at 9.3 million tonnes of copper and 15 million
ounces of gold (1.6Bt @ 0.6% Cu and 0.2g/t Au) up from 4.8 million tonnes of copper and
8.9 million ounces of gold in 2018. Group Ore Reserves are estimated at 2.1 million tonnes of
copper and 4.3 million ounces of gold (175Mt @ 1.2% Cu and 0.8g/t Au) in comparison to
2.1 million tonnes of copper and 3.1 million ounces of gold in 2018.
The information in this section is drawn from the following releases:
Deposit
Prominent Hill Mineral Resource and Ore Reserve Statement as at 30 June 2019
2019 Carrapateena Mineral Resources and Ore Reserves Statement and Explanatory Notes
as at 30 June 2019
Fremantle Doctor Mineral Resource Statement and Explanatory Notes as at 12 November 2018
West Musgrave Project Nebo-Babel Deposits Mineral Resource Statement and Explanatory Notes
as at 12 April 2019
Antas North 2019 Mineral Resource Statement and Explanatory Notes as at 30 April 2019
Pedra Branca 2019 Mineral Resource Statement and Explanatory Notes as at 25 March 2019
and 2019 Ore Reserve Statement and Explanatory Notes as at 15 November 2019
Release date
12-Nov-19
12-Nov-19
12-Nov-18
12-Apr-19
11-Jul-19
28-Nov-19
CentroGold Mineral Resource Estimate and Ore Reserve Statement as at 6 May 2019 and 24 June 2019
11-Jul-19
CentroGold Resources Increase 45% and Exceeds 1.8 Million Ounces
13-Nov-17
Note: All Mineral Resources and Ore Reserves are estimates. The Mineral Resource and Ore Reserve statements and their accompanying
explanatory notes can be viewed in full at: ozminerals.com/operations/resources-reserves/.
Summary of significant changes since 2018
Mining depletion of estimated underground Mineral Resources at Prominent Hill were offset through
growth as a result of diamond drilling in the 30 June 2019 update. Similarly, depletion of the Ore
Reserves through mining was mostly offset by additional drilling and subsequent design review.
Carrapateena Mineral Resources saw a significant increase primarily due to change of the upper half
of the mineralisation assumed to be mineable using a block cave mining method. The Ore Reserves
saw a minor increase in tonnes and metal, mainly due to refined mine design.
Antas North has undergone a full year of mining depletion.
There have been no changes to the Mineral Resource estimates of Fremantle Doctor or Chega Tudo
throughout 2019.
The joint venture with Cassini Resources continued to progress with OZ Minerals earning 70%
ownership of the project and releasing an updated Mineral Resource estimate for Nebo-Babel based
on additional drilling. This saw a large amount of Inferred material increase in confidence to Indicated
and a reduction in overall tonnes, primarily due to the estimate being confined with a pit shell.
Antas North, Pedra Branca and CentroGold are all now included in the OZ Minerals’ Group Mineral
Resource and Ore Reserve estimate following integration and internal review.
A recent review of the 2012 stated Antas South Mineral Resource estimate has concluded that there
are no longer reasonable prospects of economic extraction and the estimate has been withdrawn.
OZ MINERALS
107
2019
Mineral Resources
Copper
Prominent Hill
underground
Prominent Hill
surface stocks
Carrapateena
Fremantle Doctor
Succoth(a)
Antas South
Antas North
Pedra Branca
Total
Gold
Prominent Hill
surface stocks
CentroGold
Chega Tudo
Total
Nickel
Babel(a)
Nebo(a)
Total
Measured
Indicated
Inferred
Total
Tonnes
Cu
Au
Ag Tonnes
Cu Au
Ag Tonnes
% g/t
g/t
% g/t
g/t
Cu Au Ag Tonnes
–
Cu Au Ag
% g/t
g/t
Mt % g/t g/t
Cu
kt
Au
Ag
koz Moz
1.3
0.6
0.9
0.9
1.0
0.7
Mt
52
Mt
21
3
2
3
–
7.5
0.6
0.4
–
–
–
–
–
–
2
–
120
1.1
0.7
3 1,300
2,700
11
7.5
0.6
0.4
2
48
92
1
137
0.84
0.38
3.0
484
0.66
0.28
3.3
–
–
–
0.28
2.3
200
–
–
–
0.9
1.6
1.0
–
–
–
0.2
0.48
0.43
–
–
–
–
–
2.9
–
–
–
1.7
11
520
–
–
–
1.1
1.6
0.7
–
–
–
0.3
0.44
0.31
–
–
–
–
–
3.2
0.26
0.13
1.7
965
0.54 0.24
2.7 5,200
7,400
83
0.7
0.5
0.60
–
–
–
0.64
1.4
0.5
1.5
0.44
3
–
–
–
–
104
160
–
2.6
19
0.7
0.6
–
0.5
–
–
1.2
0.4
1.6 0.44
3
–
–
–
–
800
2,400
–
–
30
–
–
–
29
–
9
–
–
–
–
0.5
0.24
1.5
1,400
0.6 0.29
2.3 8,600 13,000
100
Mt
48
345
104
160
–
4.8
660
Tonnes
Cu
Au
Ag Tonnes
Cu Au
Ag Tonnes
Cu Au Ag Tonnes
Cu Au Ag
Mt
% g/t
g/t
15
0.10
0.80
–
–
–
–
–
–
15
0.11
0.78
2
–
–
2
Mt
–
21
8.2
29
% g/t
g/t
–
–
–
–
–
1.9
1.6
1.8
–
–
–
–
Mt
–
7.3
3.1
10
Cu
kt
17
Au
Ag
koz Moz
380
% g/t
g/t
Mt % g/t g/t
–
–
–
–
–
1.8
1.5
1.7
–
–
–
–
15
0.1
0.8
28
11.3
54
–
–
–
1.9
1.6
1.5
2
–
–
–
–
1,700
577
0.8
17
2,600
1
–
–
1
Cu
Au Tonnes
Ni
Cu
Au Tonnes
Ni
Cu Au
Tonnes
Mt
–
–
–
Ni
%
–
–
–
Cu
Au Tonnes
% g/t
Mt
Ni
%
% g/t
–
–
–
–
–
–
108
0.33
0.38
0.06
33
0.45
0.40
0.05
141
0.36
0.38
0.06
Mt
96
1.9
98
% % g/t
Mt % % g/t
0.34
0.38
0.07
204
0.34 0.38 0.06
0.36
0.39
0.04
34
0.44 0.40 0.04
0.34
0.38
0.06
238
0.35 0.38 0.06
Ni
kt
680
150
840
Cu
Au
kt Moz
770
140
910
0.4
0.05
0.5
(a) OZ Minerals currently owns 70% of West Musgrave, however the data above is reported on a 100% basis.
2019 Ore Reserves
Proved
Probable
Copper
Prominent Hill
underground
Prominent Hill
surface stocks
Carrapateena
Pedra Branca
Total
Gold
Prominent Hill
surface stocks
CentroGold
Total
Tonnes
Mt
30
Cu
%
1.3
7.5
0.6
–
1.1
38
Tonnes
Mt
15
–
15
–
1.9
1.2
Cu
%
0.1
–
0.1
Au
g/t
0.6
0.4
–
0.6
0.5
Au
g/t
0.8
–
0.8
Ag
g/t
3
2
–
–
3
Ag
g/t
2
–
2
Tonnes
Mt
8.9
Cu
%
1.0
Au
g/t
0.9
–
–
–
91
3.9
100
Tonnes
Mt
–
20
20
1.6
2.1
1.6
Cu
%
–
–
–
0.67
0.5
0.7
Au
g/t
–
1.7
1.7
Ag
g/t
3
–
7.6
–
6.9
Ag
g/t
–
–
–
Tonnes
Mt
39
Cu
%
1.3
Au
g/t
0.60
7.5
0.6
0.40
Total
Ag
g/t
3
2
Cu
kt
490
Au
koz
770
48
92
91
5.0
140
Tonnes
Mt
15
20
35
1.6
2.1
1.5
Cu
%
0.10
–
0.05
0.67
7.6
1,500
1,900
0.5
0.60
Au
g/t
0.8
1.7
1.3
–
6
Ag
g/t
2
–
1
104
89
2,100
2,900
Cu
kt
17
–
17
Au
koz
380
1,100
1,400
Ag
Moz
4
1
22
–
27
Ag
Moz
1
–
1
Note: OZ Minerals acquired the Pantera option when it acquired Avanco Resources and its Brazilian assets in August 2018; see Avanco’s ASX Announcement “Maiden Pantera MRE pushes Avanco’s
Carajás Resource Base Beyond 1 Mt of Contained Copper” released on 19 March 2018. This estimate is subject to further drilling and review. OZ Minerals’ interest in the tenement is subject to
the production of a revised Resource by 2021 and OZ Minerals’ election to either purchase the tenement or return the title to Vale at that time.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT
108
MINERAL RESOURCES & ORE RESERVES
Mt
46
–
8
104
156
314
Mt
169
2
171
Au
g/t
0.7
2018
Mineral Resources
Copper
Prominent Hill
underground
Prominent Hill
surface stocks
Carrapateena
Fremantle Doctor
Succoth(b)
Total
Gold
Prominent Hill
surface stocks
Total
Measured
Indicated
Inferred
Total
Tonnes
Cu
Au
Ag Tonnes
Cu Au
Ag Tonnes
Cu Au Ag Tonnes
Cu Au Ag
% g/t
g/t
% g/t
g/t
% g/t
g/t
Mt % g/t g/t
Mt
50
1.3
0.6
1.1
0.6
Mt
23
Cu
kt
Au
Ag
koz Moz
3
2
6
–
–
4
3
–
7
–
–
5
–
–
–
65
1.6
0.6
–
–
–
–
–
–
88
1.4
0.6
1
–
0.8
0.7
0.6
0.7
0.6
–
0.4
0.5
–
0.8
2
–
4
3
–
2
119
1.2
0.6
3 1,400
2,200
11
13
0.8
0.5
2
110
200
134
104
156
526
1.5
0.7
0.6
0.9
0.6
0.5
–
0.7
7 1,970
2,570
3
–
800
3120
943
–
4 5,193
8,060
1
28
10
–
50
Tonnes
Cu
Au
Ag Tonnes
Cu Au
Ag Tonnes
Cu Au Ag Tonnes
Cu Au Ag
% g/t
g/t
Mt
% g/t
g/t
Mt
% g/t
Mt % g/t g/t
Au
Ag
koz Moz
2
2
2
2
2.3
2.3
1
1
3
3
–
–
g/t
0.7
2.7
20
0.1
1.2
790
2.7
0.7
20
0.1
1.2
19
790
13
0.8
0.5
61
1.4
0.6
–
–
–
–
–
–
124
1.3
0.6
Mt
15
0.1
0.8
15
0.1
0.8
Nickel
Babel(a)
Nebo(a)
Total
Tonnes
Mt
–
–
–
Ni
%
–
–
–
Cu
Au Tonnes
% g/t
–
–
–
–
–
–
Mt
74
38
112
% g/t
0.4
0.4
0.4
132
211
158
Cu
Au Tonnes
Ni
Cu
Au Tonnes
Ni
Cu Au
% % g/t
Mt % % g/t
Cu
Au
kt Moz
0.3
0.4
0.3
0.4
0.3
0.4
–
–
–
243
40
283
0.3
0.5
0.4
0.4
126
0.4
200
935
170
0.4
137 1,020
1,105
2
2
Cu
kt
19
Ni
kt
830
190
–
–
Ni
%
0.4
0.5
0.4
2018 Ore Reserves
Proved
Probable
Copper
Prominent Hill
underground
Prominent
surface stocks
Carrapateena
Total
Gold
Prominent Hill surface
stocks and underground
Tonnes
Mt
28
13
0
41
Tonnes
Mt
15
Cu
%
1.4
0.8
0
1.3
Cu
%
0.1
Au
g/t
0.6
0.5
0
0.5
Au
g/t
0.8
Total
15
0.1
0.8
Ag
g/t
3
2
0
3
Ag
g/t
2
2
Tonnes
Mt
12
0
79
91
Tonnes
Mt
0
0
Cu
%
1.1
0
0
1.8
1.7
Cu
%
0
0
0.7
0.7
Au
g/t
0
0
Tonnes
Mt
40
Cu
%
1.3
Au
g/t
0.6
13
0.8
0.5
79
132
Tonnes
Mt
15
1.8
1.5
Cu
%
0.1
0.7
0.7
Au
g/t
0.8
15
0.1
0.8
Total
Ag
g/t
3
2
9
6
Ag
g/t
2
2
Cu
kt
530
Au
koz
760
110
200
1,400
2,040
1,800
2,760
Cu
kt
17
17
Au
koz
380
380
Ag
g/t
3
0
9
8
Ag
g/t
0
0
(a) At time of reporting, OZ Minerals owned 51% of West Musgrave, however the data above is reported on a 100% basis.
1
1
–
–
–
Ag
Moz
4
1
22
27
Ag
Moz
1
1
OZ MINERALS
109
Material changes in the Mineral
Resource and Ore Reserve estimates
OZ Minerals is not aware of anything that materially affects the information contained in any of the
above listed estimates, apart from depletion due to mining in the producing assets. Approximate
depletion since the Ore Reserves were last reported to 31 December 2019 is outlined below.
Asset
Prominent Hill
Antas North
Tonnes (Mt)
Cu (%)
Au (g/t)
Ag (g/t)
5.1
0.2
1.2
1.1
0.5
0.3
3
–
OZ Minerals released the West Musgrave pre-feasibility study along with an updated Mineral
Resource estimate and maiden Ore Reserve estimate on 12 February 2020. Details are available
at ozminerals.com/media/west-musgrave-pre-feasibility-study-a-low-carbon-long-life-low-cost-mine/.
Competent Persons’ Statements
The information in this report that relates to the Mineral Resources and Ore Reserves listed in the
table below is based on, and fairly represents, information and supporting documentation prepared
by the Competent Person whose name appears in the same row. Each person named in the table
below has sufficient experience which is relevant to the style of mineralisation and types of deposits
under consideration and to the activity which they have undertaken to qualify as a Competent Person
as defined in the JORC Code (2012). As a whole, the Mineral Resources and Ore Reserves Statement
in this report has been approved by each person named in the table below. Each person is a member
of the Australasian Institute of Mining and Metallurgy or recognised professional organisation, and
consents to the inclusion in this report of the matters based on their information in the form and
context in which it appears.
OZ Minerals’ employees acting as a Competent Person may be shareholders in OZ Minerals Limited,
are entitled to participate in the OZ Minerals Performance Rights Plan, and may participate in
an incentive scheme in which replacement of mining depletion at Prominent Hill is one of the
performance indicators.
Asset
Estimate
Name
Professional
Organisation
Membership
Number
Prominent Hill
Mineral Resource
Bruce Whittaker
Prominent Hill
Ore Reserve
Hendric
Carrapateena
Mineral Resource
Stuart Masters
Carrapateena
Ore Reserve
Rodney Hocking
Fremantle Doctor
Mineral Resource
Heather Pearce
AntasNorth
Mineral Resource
Justin Watson
Pedra Branca
Mineral Resource
Colin Lollo
Pedra Branca
Ore Reserve
Ruy Lacourt
AusIMM
AusIMM
AusIMM
AusIMM
AusIMM
AusIMM
AusIMM
SME
AIG
Centro Gold
Centro Gold
Chega Tudo
Succoth
Mineral Resource
Aaron Green
Ore Reserve
Adriano Carneiro
AusIMM
Mineral Resource
Aaron Green
Mineral Resource
Aaron Green
AIG
AIG
Nebo-Babel
Mineral Resource
Mark Burdett
AusIMM
222853
321723
108430
317073
109714
205253
225331
4172669RM
1719
319595
1719
1719
224519
Nebo-Babel and Succoth are part of the OZ Minerals and Cassini Resources Ltd Joint Venture for the
West Musgrave Project of which OZ Minerals has a 70% majority. Mineral Resources for Succoth
were undertaken on behalf of Cassini Resources Ltd prior to OZ Minerals reaching 51%. There has
been no material change to the Succoth Mineral Resources.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 110
MINERAL RESOURCES & ORE RESERVES
Governance arrangements
OZ Minerals has established Mineral Resource and Ore Reserve processes, which set
company-wide consistency, rigour and discipline in the preparation and reporting of
Mineral Resources and Ore Reserves in accordance with industry best practice.
Updates to Mineral Resource and Ore Reserve estimates compiled during 2019 were
completed in accordance with the OZ Minerals guiding principles, suitably modified
to meet current company structures, delegated authorities and estimate requirements.
These included:
/ reporting in accordance with the 2012 Edition of the Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves (JORC Code 2012 Edition)
/ suitably qualified and experienced Competent Persons
/ all Mineral Resource and Ore Reserve estimates being subject to independent
review by suitably qualified practitioners, inclusive of the Competent Persons
/ review by the Mineral Resource and Ore Reserve Steering Committee
/ approval by the Board of the Mineral Resources and Ore Reserves estimates prior
to release to the market.
OZ MINERALS Financial
Report
112
FINANCIAL REPORT
Lead Auditor’s Independence
Declaration under Section 307C
of the Corporations Act 2001
To the Directors of OZ Minerals Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of OZ Minerals
Limited for the financial year ended 31 December 2019 there have been:
i. no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
ii. no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Paul Cenko
Partner,
Adelaide
18 February 2020
KPMG, an Australian partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under Professional Standards Legislation.
OZ MINERALS
Notes
1
113
Consolidated statement
of comprehensive income
Revenue
Other income
Mining
Processing
Freight
Site administration
Royalties
Inventory movement
Corporate administration
Exploration and corporate development
Other expenses
Foreign exchange gain/(loss)
Profit before interest and income tax
Finance income
Finance expense
Profit before income tax
Income tax
Profit for the year attributable to equity holders of OZ Minerals Limited
Other comprehensive gain/(loss)
Items that will not be reclassified subsequently to future Income Statements
Change in fair value of investments in equity securities, net of tax
Items that may be reclassified subsequently to future to Income Statements
Cash flow hedges reserve change in fair value
Cash flow hedges reclassified to profit and loss
Foreign operations – foreign currency translation differences
Other comprehensive loss for the year, net of tax
Total comprehensive income for the year attributable to equity holders of OZ Minerals Limited
Basic and diluted earnings per share (cents)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying Notes.
3
2
2019
$m
1,107.0
0.2
(251.5)
(146.8)
(80.5)
(48.8)
(57.6)
(140.8)
(50.2)
(93.9)
(4.5)
0.9
233.5
5.1
(10.0)
228.6
(64.7)
163.9
(7.6)
(52.0)
23.9
8.9
(26.8)
137.1
cents
50.7
2018
$m
1,117.0
2.8
(310.1)
(146.5)
(72.9)
(41.1)
(56.3)
(83.7)
(29.0)
(67.2)
(14.2)
7.2
306.0
12.0
(5.1)
312.9
(90.5)
222.4
(6.7)
(17.8)
–
18.9
(5.6)
216.8
cents
71.5
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 114
FINANCIAL REPORT
Consolidated statement of changes in equity
For the year ended 31 December 2019
Notes
Issued
capital
$m
Retained
earnings
$m
Cash flow
hedge
reserve
$m
Treasury
shares
$m
Foreign
currency
translation
reserve
$m
Non-
controlling
interest
$m
Balance as at 1 January 2019
2,280.4
638.5
(21.4)
(1.2)
18.9
Effect of transition to AASB 16 Leases
Adjusted opening balance
Total comprehensive income for the year
Profit for the year
Other comprehensive (loss)/income
Total comprehensive (loss)/income for the year
Transactions with owners, recorded directly in equity
Dividends
4
Share-based payment transactions, net of income tax
Issue of treasury shares
Total transactions with owners
Balance as at 31 December 2019
For the year ended 31 December 2018
Notes
23
–
2,280.4
(6.1)
632.4
163.9
(7.6)
156.3
(74.3)
8.0
(1.2)
(67.5)
721.2
–
(21.4)
–
(28.1)
(28.1)
–
–
–
(49.5)
–
(1.2)
–
–
–
–
–
1.2
1.2
–
–
18.9
–
8.9
8.9
–
–
–
–
27.8
–
–
–
–
–
–
–
2,280.4
Issued
capital
$m
Retained
earnings
$m
Cash flow
hedge
reserve
$m
Treasury
shares
$m
Foreign
currency
translation
reserve
$m
Non-
controlling
interest
$m
Balance as at 1 January 2018
2,029.0
492.3
(3.6)
(1.4)
Total comprehensive income for the year
Profit for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss) for the year
–
–
–
Transactions with owners, recorded directly in equity
Shares issued – acquisition of Avanco
12,16
245.0
Non-controlling interest in acquisition of Avanco
Non-controlling interest acquired during the year
Dividends
Share-based payment transactions, net of income tax
Equity issued under employee share plan
Total transactions with owners
Balance as at 31 December 2018
4
12,13
–
–
–
–
6.4
251.4
2,280.4
222.4
(6.7)
215.7
–
–
–
(67.6)
4.5
(6.4)
(69.5)
638.5
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying Notes.
–
(17.8)
(17.8)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.2
–
0.2
–
–
18.9
18.9
–
–
–
–
–
–
–
(21.4)
(1.2)
18.9
Total
equity
$m
2,915.2
(6.1)
2,909.1
163.9
(26.8)
137.1
(74.3)
8.0
–
(66.3)
2,979.9
Total
equity
$m
2,516.3
222.4
(5.6)
216.8
245.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(121.9)
(121.9)
121.9
–
–
–
–
–
121.9
(67.6)
4.7
–
182.1
2,915.2
OZ MINERALS 115
Consolidated balance sheet
At 31 December 2019
Notes
Current assets
Cash and cash equivalents
Trade receivables
Tax receivable
Inventories
Prepayments
Derivative financial instruments
Other receivables
Total current assets
Non-current assets
Deferred tax assets
Inventories
Exploration assets
Property, plant and equipment
Right-of-use assets
Other assets
Total non-current assets
Total assets
Current liabilities
Trade payables and accruals
Other payables
Current tax provision
Employee benefits
Provisions
Derivative financial instruments
Loans and borrowings
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Employee benefits
Provisions
Derivative financial instruments
Loans and borrowings
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Cash flow hedge reserve
Retained earnings
Treasury shares
Foreign currency translation reserve
Total equity attributable to equity holders of OZ Minerals Limited
5
14
3
5
8
7
9
10
14
14
3
10
14
14
12
2019
$m
134.0
83.1
–
238.3
7.7
–
23.4
486.5
7.1
299.3
112.1
2,696.3
176.1
36.6
3,327.5
3,814.0
168.6
8.2
5.6
14.5
1.0
60.4
37.8
296.1
270.1
1.7
97.4
22.7
146.1
538.0
834.1
2,979.9
2,280.4
(49.5)
721.2
–
27.8
2,979.9
Comparative information for exploration assets and Property, plant and equipment were reclassified as per Note 16. The above Consolidated Balance Sheet should be read in conjunction
with the accompanying Notes.
2018
$m
505.1
70.9
4.9
276.8
6.3
17.9
22.2
904.1
2.5
401.6
78.1
1,999.5
–
57.1
2,538.8
3,442.9
145.1
7.1
–
12.7
3.9
9.3
–
178.1
264.6
1.5
59.3
24.2
–
349.6
527.7
2,915.2
2,280.4
(21.4)
638.5
(1.2)
18.9
2,915.2
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 116
FINANCIAL REPORT
Consolidated statement of cash flows
For the year ended 31 December 2019
Notes
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Payments for exploration and evaluation
Income tax paid
Financing costs
Interest received
Net cash inflows from operating activities
Cash flows from investing activities
Payment for property, plant and equipment
Exploration assets(a)
Payment for Avanco, net of cash acquired
Net cash outflows from investing activities
Cash flows from financing activities
Dividends paid to shareholders
Payments for loans and borrowings
Net cash outflows from financing activities
6
4
Net decrease in cash held
Cash and cash equivalents at beginning of the year
Effects of exchange rate changes on foreign currency denominated cash balances
Cash and cash equivalents at the end of the year
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying Notes.
(a) In 2018, Exploration assets acquired under Avanco acquisition were included within payments for Avanco.
2019
$m
1,139.9
(492.7)
(96.5)
(44.1)
(2.3)
6.3
510.6
(737.7)
(26.2)
–
(763.9)
(74.3)
(47.3)
(121.6)
(374.9)
505.1
3.8
134.0
2018
$m
1,204.1
(550.2)
(67.6)
(148.7)
(1.0)
13.0
449.6
(426.4)
–
(183.3)
(609.7)
(67.6)
–
(67.6)
(227.7)
729.4
3.4
505.1
OZ MINERALS 117
Notes to the consolidated
financial statements
Introduction
The principal business activities of OZ Minerals Limited
(OZ Minerals or the Company) and its controlled entities
(collectively the ‘Consolidated Entity’ or the ‘Group’) were
the mining and processing of ore containing copper, gold and
silver; undertaking exploration activities; and the development
of mining projects.
The Company is a for profit entity and incorporated and domiciled in Australia and limited by shares
which are traded on the Australian Securities Exchange. OZ Minerals’ registered office is located at
2 Hamra Drive, Adelaide Airport, South Australia 5950, Australia.
The Consolidated Financial Statements of OZ Minerals Limited and its controlled entities for the year
ended 31 December 2019:
/ are general purpose financial statements prepared in accordance with Australian Accounting
Standards (AASBs) and the Corporations Act 2001 and comply with International Financial
Reporting Standards (IFRS)
/ are presented in Australian dollars which is also the functional currency of its principal operations.
The controlled entities of the Company have the functional currency of Australian dollars and US
dollars. The financial statements of the Company include consolidation of its subsidiaries referred
to in Note 18.
/ have amounts rounded off to within the nearest million dollars to one decimal place unless
otherwise stated, in accordance with Instrument 2016/191, issued by the Australian Securities
and Investments Commission.
The Consolidated Financial Statements have been prepared on a going concern basis and under
the historical cost convention, except for the following items which are measured at fair value,
or otherwise, in accordance with the provisions of applicable accounting standards:
/ financial instruments, including trade receivables
/ derivative financial instruments
/ items of inventory and property, plant and equipment which have been written down in
accordance with applicable accounting standards.
Subsequent to 31 December 2019, the Board of Directors has resolved to pay a final dividend for the
2019 financial year, as discussed in Note 4. There were no other events that occurred subsequent
to the reporting date which have significantly affected or may significantly affect the Consolidated
Entity’s operations or results in future years.
31 December 2018 balances in relation to Exploration assets and Property, plant and equipment
associated with an acquisition in the prior year have been reclassified (Note 16), the accounting
for which was completed in the current period.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 118
FINANCIAL REPORT
Group performance
1. Operating segments
Segment
Principal activities
Prominent Hill
Carrapateena
Carajás
Exploration &
development
Mining and processing high grade underground ore containing copper, gold and silver along
with open pit ore from stockpiles. The Prominent Hill mine is located in the Gawler Craton
of South Australia. The Prominent Hill mine generates revenue from the sale of concentrate
containing copper, gold and silver to customers in Asia, Europe and Australia.
Mining and processing underground ore containing copper, gold and silver. The Carrapateena
mine which is located in the Gawler Craton of South Australia was constructed during the year
and produced first saleable concentrate in December 2019.
Mining and processing open pit ore containing copper and gold from the Antas mine and
developing the Pedra Branca Mine in the Carajás Hub in Brazil. The Carajás hub generates
revenue from the sale of concentrate containing copper and gold to customers in Europe and
Asia. The Company is undertaking exploration at Pantera and other projects.
Exploration and evaluation activities associated with other projects, including exploration
arrangements with Minotaur Exploration Ltd, Cassini Resources Limited, Mithril Resources,
Red Metal, Acapulco Gold, Mineral Prospektering i Sverige, Inversiones Mineras La Chalina
S.A.C. and corporate development activities.
The Company undertakes its own exploration on tenements around existing operating and
development assets including CentroGold.
Corporate
(corporate activities)
Other corporate activities include the Consolidated Entity’s group office (which includes all
corporate expenses that cannot be directly attributed to the operation of the Consolidated
Entity’s operating segments), other investments in equity securities and cash balances.
Recognition and measurement of revenue
The Consolidated Entity generates sales revenue primarily from the transfer of concentrate to buyers
and in some cases, based on the commercial terms of the contract, delivering it to customers.
The performance obligation to transfer concentrate and delivery arises as and when a shipment is
agreed with customers against ongoing short and long-term supply contracts. Revenue is allocated
between the performance obligations and recognised as each performance obligation is met, which
for the primary obligation occurs when the concentrate is delivered to a vessel or location and for
the secondary obligation, if applicable, when the concentrate is delivered to the customer’s location.
Revenue arising from the secondary obligation is immaterial to the Group and aggregated with
the primary obligation for disclosure purposes. The Group’s sale of concentrate incurs customary
treatment and refining charges and other commercial costs consistent with industry practice. These
items are a deduction from the value of metal contained within the concentrate and accordingly are
recognised as a deduction from revenue.
As is industry practice, the Consolidated Entity typically makes sales whereby the final sales price for
the primary performance obligation is determined based on the market price prevailing at a date
in the future, typically three months. Revenue for the primary performance obligation is measured
based on the fair value of the consideration specified in a contract with the customer at the time
of settling the performance obligation and is determined by reference to forward market prices.
Provisional pricing adjustments, which occur between the fair value at the time of settling the primary
performance obligation and the final price, are also recorded within revenue.
Gains and losses on hedge instruments related to sales contracts are recorded in revenue and
generally offsets movement resulting from provisional pricing.
OZ MINERALS 119
Net revenue by geographical region
9.1
149.6
9.2
123.3
548.0
554.3
800
600
400
200
0
)
m
$
(
s
e
t
a
r
t
n
e
c
n
o
c
f
o
s
e
l
a
s
m
o
r
f
e
u
n
e
v
e
R
Copper
Gold
Silver
4.3
60.1
4.2
67.4
245.6
239.4
19.1
0.9
70.3
1.2
94.8
23.2
2019 Asia
2018 Asia
2019 Australia
2018 Australia
2019 Europe
2018 Europe
Net revenue by product
2019
Total revenue from sales of concentrates
Prominent Hill
$m
Carajás
$m
Copper
Gold
Silver
Total
808.6
218.1
14.1
1,040.8
55.3
10.7
0.2
66.2
2018
Total revenue from sales of concentrates
Prominent Hill
$m
Carajás
$m
Copper
Gold
Silver
Total
845.3
206.8
14.1
1,066.2
43.2
7.1
0.5
50.8
Total
$m
863.9
228.8
14.3
1,107.0
Total
$m
888.5
213.9
14.6
1,117.0
Revenue information presented is based on the location of the customer’s operations. Three major
customers (2018: Two) who individually accounted for more than 10% of total revenue contributed
approximately 81% of total revenue (2018: 64%).
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT
120
FINANCIAL REPORT
Segmental financial information
31 December 2019
Revenue
Cost of goods sold(a)
Underlying EBITDA(b)
Net depreciation and amortisation
Capital expenditure
Property, plant & equipment
31 December 2018
Revenue
Cost of goods sold(a)
Underlying EBITDA(b)
Net depreciation and amortisation
Capital expenditure
Property, plant & equipment(c)
Prominent Hill
$m
Carrapateena
$m
Carajás
$m
Exploration &
development
$m
Corporate
$m
Consolidated
$m
1,040.8
(481.4)
587.4
(207.2)
105.8
717.8
1,066.2
(465.6)
618.2
(201.4)
77.4
671.6
–
–
(21.1)
–
596.5
1,385.0
–
–
(11.4)
–
335.0
763.2
66.2
(50.1)
5.0
(9.4)
9.9
219.9
50.8
(36.2)
(1.9)
(23.5)
4.1
214.3
–
–
(72.3)
–
–
332.0
–
–
(45.0)
–
7.0
328.4
–
–
(36.6)
(12.3)
24.1
41.6
–
–
(19.5)
(3.6)
9.9
22.0
1,107.0
(531.5)
462.4
(228.9)
736.3
2,696.3
1,117.0
(501.8)
540.4
(228.5)
433.4
1,999.5
(a) Cost of goods sold does not include net depreciation and amortisation, Net realisable value adjustments (Prominent Hill $38.3 million increase, Brazil $10 million decrease) and corporate cost
allocations (Prominent Hill $8.2 million, Brazil $2.5 million).
(b) OZ Minerals financial results are reported under International Financial Reporting Standards (‘IFRS’). This Annual Report and Results for Announcement to the Market include certain non-IFRS
measures including underlying Earnings before interest tax, depreciation and amortisation (EBITDA) and underlying EBIT. These measures are presented to enable an understanding of the
underlying performance of the Consolidated Entity and are consistent with the information the Consolidated Entity’s chief operating decision makers use to assess the underlying performance
of the business and make resource allocations.
(c) Property plant and equipment 2018 balances restated due to finalisation of fair values recognised in the balance sheet as at 31 December 2018 previously accounted for on a provisional basis,
refer to Note 16.
Reconciliation of consolidated underlying EBITDA to profit after tax
31 December 2019
$m
31 December 2018
$m
Underlying EBITDA(a)
Non-underlying expense(b)
Depreciation
Other assets amortisation
Capitalised depreciation into inventory/(unwind)
Earnings before finance income and tax
Net finance income/(expense)
Profit before tax
Tax expense
Profit for the year attributable to equity holders of OZ Minerals Limited
462.4
–
(114.9)
(6.5)
(107.5)
233.5
(4.9)
228.6
(64.7)
163.9
540.4
(5.9)
(148.3)
-
(80.2)
306.0
6.9
312.9
(90.5)
222.4
a) Underlying EBITDA includes Net realisable value adjustments for Prominent Hill $38.3 million increase and Brazil $10 million decrease (FY 2018: $25.0 million). It also includes corporate and
exploration expense of $140 million (FY 2018: $109.3 million), Other income $0.2 million (FY 2018: $2.8 million), Other expense $4.5 million (FY 2018: $14.2 million) and foreign exchange gain
of $0.9 million (FY 2018: $7.2 million).
(b) Corresponds to acquisition costs associated with the Avanco transaction of $5.9 million relating to due diligence, legal, transaction and consulting fees.
Net Depreciation and amortisation expense for the year
31 December 2019
$m
31 December 2018
$m
Mining
Processing
Site and corporate administration
Unwind/(capitalised) depreciation into inventory
Total depreciation and amortisation expense
72.5
26.0
22.9
107.5
228.9
108.2
27.2
12.9
80.2
228.5
The total employee benefits expense for 2019 was $81.7 million (2018: $59.8 million).
OZ MINERALS 2. Earnings per share
Basic and diluted earnings per share – cents
Inputs used in calculating basic and diluted earnings per share – $ millions
Profit after tax
Weighted average number of ordinary shares on issue
used in the calculation of basic earnings per share
2019
50.7
2018
71.5
163.9
222.4
323,431,247
311,168,127
Basic earnings per share is calculated by dividing the profit attributable to equity holders of
OZ Minerals Limited, by the weighted average number of ordinary shares outstanding during the
financial year. The weighted average is determined by the total number of shares on issue less
treasury shares held by the Company throughout the period.
Diluted earnings per share adjusts the amounts used in the determination of basic earnings per share
to take into account dilutive potential ordinary shares and the weighted average number of shares
assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
3. Income tax
Income tax expense comprises current and deferred tax of the Consolidated Entity. Current and
deferred tax expenses are recognised in other comprehensive income or directly in equity as is
appropriate.
RECOVERABILITY OF DEFERRED TAX ASSETS
The Consolidated Entity is subject to income taxes in Australia and of the jurisdictions where it has foreign operations.
Significant judgement is required in the application of income tax legislation to determine the provision for income
taxes. There are many transactions and calculations undertaken during the ordinary course of business for which the
ultimate tax determination is uncertain, and for which provisions are based on estimated amounts probable of being
accepted by the relevant tax authorities. Where the final tax outcome of these matters is different from the amounts
that were initially recorded, such differences will impact the current and deferred tax provision in the period in which
the determination is made.
Assumptions about the generation of future taxable profits influence the ability of the Consolidated Entity to
recognise (or continue to recognise) deferred tax assets. Taxable profit estimates are based on estimated future
production and sales volumes, commodity prices, foreign exchange rates, operating costs, restoration costs and capital
expenditure. A change in these assumptions may impact the amount of deferred tax assets recognised in the balance
sheet in future periods.
121
(
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 122
FINANCIAL REPORT
Group taxation
The OZ Minerals Group principal operations are located in Australia and Brazil. Income tax expense,
current tax and deferred tax balances have been determined based on the tax laws and tax rates
applicable in the relevant jurisdiction.
OZ Minerals Limited and its wholly owned Australian-controlled entities are part of a tax consolidated
group. OZ Minerals Limited is the head company of the Australian tax consolidated group.
Income tax expense in the income statement
Current income tax expense
Deferred income tax expense
Income tax expense
Reconciliation of income tax expense to pre-tax profit
Profit before income tax
Income tax expense at the Australian tax rate of 30%
Adjustments:
Variation in overseas tax
Non-deductible expenditure
Revision for prior periods
Recognition of previously unrecognised tax losses
Derecognition of overseas losses
Income tax expense
2019
$m
(54.6)
(10.1)
(64.7)
2019
$m
228.6
(68.6)
0.1
(14.1)
1.5
17.8
(1.4)
(64.7)
2018
$m
(43.9)
(46.6)
(90.5)
2018
$m
312.9
(93.9)
1.8
(1.4)
(0.2)
7.4
(4.2)
(90.5)
Unrecognised tax losses
A review of unrecognised tax losses was undertaken during the year and as a result, the Group
changed its estimate of the probability that future taxable profits will be available against which
unused tax losses can be utilised and additional restricted tax losses of $17.8 million tax effected
(2018: $7.4 million) were recognised on the balance sheet. Australian restricted tax losses of
$152.9 million tax effected (31 December 2018: $170.7 million) remain unrecognised at
31 December 2019. Capital tax losses of $595.0 million tax effected (2018: $595.0 million tax
effected) remain unrecognised at 31 December 2019.
Deferred tax assets
Unrestricted tax losses
Restricted tax losses
Lease liability
Provisions and accruals
Derivative financial instruments
Other
Total deferred tax assets
Less offset against deferred tax liabilities
Net deferred tax assets
31 December
2018
$m
Recognised
in income
statement
$m
Recognised
in equity
$m
31 December
2019
$m
–
34.1
–
14.2
4.6
8.1
61.0
(58.5)
2.5
4.7
10.3
39.8
1.5
9.0
0.2
65.5
(60.9)
4.6
–
–
15.4
–
11.3
–
26.7
(26.7)
–
4.7
44.4
55.2
15.7
24.9
8.3
153.2
(146.1)
7.1
OZ MINERALS 123
Deferred tax liabilities
Inventories
Exploration assets
Property plant and equipment
Right-of-use assets
Provisions and accruals
Total deferred tax liabilities
Less offset against deferred tax assets
Net deferred tax liabilities
Deferred tax assets
Restricted tax losses
Provisions and accruals
Derivative financial instruments
Other
Total deferred tax assets
Less offset against deferred
tax liabilities
31 December
2018
$m
Recognised
in income
statement
$m
Recognised
in equity
$m
31 December
2019
$m
(4.8)
(4.8)
(309.6)
–
(3.9)
(323.1)
58.5
(264.6)
0.2
(8.7)
(26.2)
(41.1)
0.2
(75.6)
60.9
(14.7)
–
(0.2)
(4.4)
(12.9)
–
(17.5)
26.7
9.2
(4.6)
(13.7)
(340.2)
(54.0)
(3.7)
(416.2)
146.1
(270.1)
31 December
2017
$m
Recognised
in income
statement
$m
Recognised
in equity
$m
Acquisition
of Avanco
$m
31 December
2018
$m
32.5
11.7
6.6
13.2
64.0
(64.0)
1.6
0.6
(10.3)
(5.2)
(13.3)
13.9
–
–
8.3
0.1
8.4
(8.4)
–
–
1.9
–
–
1.9
–
1.9
34.1
14.2
4.6
8.1
61.0
(58.5)
2.5
Net deferred tax assets
–
0.6
Deferred tax liabilities
31 December
2017
$m
Recognised
in income
statement
$m
Recognised
in equity
$m
Acquisition
of Avanco
$m
31 December
2018
$m
Inventories
Exploration assets
Property plant and equipment
Provisions and accruals
Total deferred tax liabilities
Less offset against deferred tax assets
Net deferred tax liabilities
(4.7)
–
(105.4)
(1.3)
(111.4)
64.0
(47.4)
(0.1)
(1.2)
(32.8)
0.8
(33.3)
(13.9)
(47.2)
–
–
(6.4)
–
(6.4)
8.4
2.0
–
(3.6)
(165.0)
(3.4)
(172.0)
–
(172.0)
(4.8)
(4.8)
(309.6)
(3.9)
(323.1)
58.5
(264.6)
Recognised restricted tax losses are subject to an available fraction which limits the amount of these losses that can be utilised each year.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 124
FINANCIAL REPORT
Recognition and measurement of income taxes
Current tax
The tax currently payable is based on taxable profit for the year, using rates enacted or substantively
enacted at the reporting date, and any adjustments to tax payable in respect of previous years.
Deferred tax
Deferred tax assets and liabilities are determined using the balance sheet method which calculates
temporary differences based on the difference between the carrying amount of the Consolidated
Entity’s assets and liabilities in the balance sheet and their associated tax bases.
Deferred tax assets and liabilities are not recognised for temporary differences arising from
investments in subsidiaries where the Consolidated Entity is able to control the reversal of the
temporary differences, and it is probable that they will not reverse in the foreseeable future. Deferred
tax assets are recognised to the extent that it is probable that future taxable income will be available
to utilise them.
The carrying amount of deferred tax assets is reviewed at the end of each reporting date and
adjusted based on estimates of future taxable income and/or capital gains against which the deferred
tax asset could be utilised.
Deferred tax assets and liabilities are measured at the tax rates applicable to each jurisdiction which
are expected to apply in the period when the assets are realised, or liabilities discharged. They are
offset where they relate to the same tax authority and there is a legally enforceable right to offset.
4. Dividends
Since the end of the financial year, the Board of Directors resolved on 18 February 2020 to pay
a fully-franked dividend of 15 cents per share. The record date for entitlement to this dividend is
12 March 2020. The financial impact of the dividend amounting to $48.6 million has not been
recognised in the Consolidated Financial Statements for the year ended 31 December 2019 and
will be recognised in subsequent consolidated financial statements.
The details in relation to dividends announced or paid since 1 January 2018 are set out below:
Record date
Date of payment
Fully franked
cents per share
Total dividends
$m
12 March 2020
3 September 2019
12 March 2019
3 September 2018
12 March 2018
5. Inventories
26 March 2020
17 September 2019
26 March 2019
17 September 2018
26 March 2018
15
8
15
8
14
48.6
25.9
48.4
25.8
41.8
NET REALISABLE VALUE OF INVENTORIES
Inventories are recognised at the lower of cost and net realisable value (NRV).
NRV of ore is based on the estimated amount expected to be received when the ore is processed and sold, less
incremental costs to convert the ore to concentrate and selling costs. The model of NRV for stockpiles involves
significant judgements and estimates in relation to future ore blend rates, timing of processing, processing costs,
commodity prices, foreign exchange rates, discount rates and the ultimate timing of sale of concentrates produced.
A change in any of these critical assumptions will alter the estimated NRV and may therefore impact the carrying
value of inventories.
OZ MINERALS 125
Inventories
)
m
$
(
e
u
a
v
l
y
r
o
t
n
e
v
n
I
250
200
150
100
50
0
31 December 2019
31 December 2018
224.8
213.2
188.4
184.9
145.3
70.9
58.8
74.5
4.1
0.0
Concentrates
at cost
Concentrates
at NRV
Ore stockpile
(current)
at cost
4.5
0.0
Ore stockpile
(current)
at NRV
Ore stockpile
(non current)
at cost
Ore stockpile
(non current)
at NRV
Stores and
consumables
at cost
25.6
21.0
Concentrates – at cost
Concentrates – at net realisable value
Ore stockpile – at cost
Ore stockpile – at net realisable value
Stores and consumables – at cost
Inventories – current
Ore stockpile – non-current at cost
Ore stockpile – non-current at net realisable value
Inventories – non-current
Total inventories
2019
$m
58.8
4.1
145.3
4.5
25.6
238.3
74.5
224.8
299.3
537.6
2018
$m
70.9
–
184.9
–
21.0
276.8
213.2
188.4
401.6
678.4
An assessment of the NRV of ore stockpiles and concentrates resulted in an adjustment to increase
the net value of inventory by $28.3 million in 2019 (2018: $25.0 million). The increase is mainly a
reversal of previous net realisable value write downs.
Recognition and measurement of inventories
Costs are assigned to individual items of inventory on the basis of weighted average costs. Costs
comprise direct materials and labour and a proportion of overhead expenditure directly related to
the production of inventories. Expenditure directly related to the production of inventories includes
processing costs; transportation costs to the point of sale; and depreciation of plant, equipment,
mining property and development assets, the latter of which includes deferred stripping assets and
mine rehabilitation costs incurred in the mining process.
Inventories expected to be processed or sold within 12 months after the balance date are classified
as current assets and all other inventories are classified as non-current.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT
126
FINANCIAL REPORT
6. Operating cash flows
The Consolidated Entity’s operating cash flow reconciled to profit after tax is as follows.
Profit after tax for the year
Adjustments for:
Depreciation and amortisation
Lease amortisation
Foreign exchange loss on cash balances
Share based payments
Other items
Change in assets and liabilities:
Trade and other receivables
Prepayments & other assets
Inventories
Trade and other payables
Provision for employee benefits
Provision for demobilisation and other provisions
Derivative financial instruments
Net current and deferred tax liability
Net cash inflow from operating activities
2019
$m
163.9
98.1
23.3
(3.8)
8.0
0.4
(13.4)
19.1
140.8
26.3
2.0
4.0
30.5
11.4
510.6
2018
$m
222.4
148.3
1.8
(3.4)
4.7
3.9
46.8
(34.7)
83.7
35.1
(1.9)
5.9
(0.7)
(62.3)
449.6
Recognition and measurement of cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents comprise short-term and
highly liquid cash deposits that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of change in value. For the purposes of the Consolidated Statement
of Cash Flows, cash includes cash on hand, at call deposits and cash equivalents.
OZ MINERALS 127
7. Property, plant and equipment
31 December 2019
At cost
Accumulated depreciation and impairment losses
Closing carrying amount
Reconciliation of carrying amounts
Opening carrying amount at 1 January 2019(a)
Additions and transfers
Depreciation
Foreign currency exchange differences
Closing carrying amount at 31 December 2019
Plant and
equipment
$m
Mine property
and development
$m
Freehold land
and buildings
$m
Mineral
rights
$m
Capital work
in progress
$m
Total
$m
1,679.0
(939.9)
739.1
360.2
425.5
(47.5)
0.9
739.1
2,165.8
(1,455.4)
710.4
316.5
424.6
(31.0)
0.3
710.4
248.7
(146.3)
102.4
56.1
59.2
(13.1)
0.2
102.4
479.6
–
479.6
664.8
5,237.9
–
(2,541.6)
664.8
2,696.3
474.4
792.3
1,999.5
–
–
5.2
479.6
(127.5)
–
–
781.8
(91.6)
6.6
664.8
2,696.3
(a) Opening balances restated as purchase price allocations in relation to the Avanco acquisition were finalised and recognised in the balance sheet as at 31 December 2018. Refer to Note 16.
31 December 2018
At cost
Accumulated depreciation and impairment losses
Closing carrying amount
Reconciliation of carrying amounts
Opening carrying amount at 1 January 2018
Acquisition through business combination(b)
Additions and transfers including deferred mining
Depreciation expense
Foreign currency exchange differences(b)
Closing carrying amount at 31 December 2018
1,252.6
(892.4)
360.2
313.5
66.0
32.5
(54.0)
2.2
360.2
1,740.9
(1,424.4)
316.5
330.1
19.3
54.6
(88.0)
0.5
316.5
189.3
(133.2)
56.1
60.9
–
1.5
(6.3)
–
56.1
474.4
–
474.4
–
455.2
–
–
19.2
474.4
792.3
4,449.5
–
(2,450.0)
792.3
1,999.5
471.3
1,175.8
–
321.0
–
–
540.5
409.6
(148.3)
21.9
792.3
1,999.5
(b) Acquisition through business combinations and associated foreign currency exchange differences have been restated upon completion of purchase price allocations at fair value and exploration
assets of $75.0 million have been recognised as at acquisition date. See Note 8 for further details.
Depreciation was $91.6 million for the year compared to $148.3 million in 2018. Depreciation expense decreased primarily due to the
closure of the Prominent Hill open pit in the first quarter of 2018 which was partly offset by the depreciation charges associated with
the addition of the Antas open pit mine.
The mineral rights balance at 31 December 2019 of $479.6 million is attributable to the Carajás province ($147.6 million) and the
Gurupi province ($332.0 million).
The original acquisition of Carrapateena provided for two further payments upon commercial production being reached:
/ US$50 million on production of copper, uranium, gold or silver.
/ US$25 million on production of rare earths, iron or any other commodity.
As at the reporting date, OZ Minerals had not reached the specified performance milestones to recognise a liability on the balance
sheet for these further payments.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 128
FINANCIAL REPORT
Recognition and measurement of property, plant and equipment
Items of property, plant and equipment are stated at cost less accumulated depreciation and
accumulated impairment losses. Cost includes expenditure that is directly attributable to the
acquisition of the items and costs incurred in bringing assets into use.
Expenditure associated with mining that relates to developing access to new sections of an ore body
is capitalised as a mine development asset and depreciated on a units of production basis as ore is
extracted. When ore extraction and mine development occur concurrently expenditure is allocated
between the cost of ore extraction (inventory) and mine development on the basis of the proportion
of underlying activity; typically, meters advanced or material moved.
Mineral rights comprise identifiable mineral resources and ore reserves which are acquired as part
of a business combination and are recognised at fair value at date of acquisition. Mineral rights are
subsequently reclassified as mine property and development once mine development commences.
Mine property and development assets include costs transferred from exploration and evaluation
assets and mineral rights once technical feasibility and commercial viability of an area of interest are
demonstrated. After transfer, all subsequent expenditures to develop the mine to the production
phase and which are considered to benefit mining operations in future periods are capitalised.
The proceeds from the sale of any concentrate produced from ore extracted and processed as part of
the development of the asset prior to it being deemed ready for use are deducted from the cost of
the asset, less any further processing and selling costs incurred.
The present value of the expected cost of decommissioning, rehabilitation, restoration and
dismantling of assets after its use is included in the cost of the respective asset if the recognition
criteria for a provision is met including revision to the expected cost.
Property, plant and equipment is tested for impairment when there is an indication of impairment.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash inflows. An impairment loss is recognised for the amount by which the
asset or cash generating unit (CGU) carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value, less costs to dispose and its value in
use. Assets that have been impaired are reviewed for possible reversal of impairment at each
reporting date.
Value in use is the net amount expected to be recovered through cash flows arising from the
continued use and subsequent disposal of an asset (or group of assets). In assessing value in use,
estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and risks specific to the asset.
The asset’s fair value less costs to dispose is the amount obtainable from the sale of an asset or
cash-generating unit in an arm’s length transaction between knowledgeable and willing parties,
less the estimated costs of disposal.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to
generate economic benefits by using the asset in its highest and best use, or by selling it to another
market participant that would use the asset in its highest and best use.
MINERAL RESOURCE AND ORE RESERVE ESTIMATES
The estimated quantities of mineral resource and ore reserve estimates are based upon interpretations of geological
and geophysical models and require assumptions to be made regarding exchange rates, commodity prices, future
capital requirements and future operating performance.
Changes in reported mineral resource and ore reserve estimates can impact the carrying value of property, plant
and equipment, including deferred mining expenditure; capitalised exploration; provisions for mine rehabilitation;
restoration and dismantling obligations; and recognition of deferred tax assets as well as the amount of depreciation
charged to the income statement.
Changes in the carrying value of the assets may arise principally through changes in the income that can be
economically generated from each project. Changes in depreciation expense may arise through a change in the
units of ore available for extraction over which property, plant and equipment is depreciated.
OZ MINERALS 129
RECOVERABILITY OF ASSETS
Cash generating units are tested for impairment when there is an indication that the CGU may be impaired. Examples
of impairment indicators include the Group’s net assets exceeding its market capitalisation, unfavourable fluctuations
in commodity prices and foreign exchange rates, or a decline in the CGU’s operating performance.
The Consolidated Entity undertook a review of the Prominent Hill, Carrapateena, Carajas and Gurupi CGU’s to
determine whether there was any indication that these CGU’s had suffered an impairment loss. The Consolidated
Entity concluded that there were no such indicators that the CGUs were impaired at the reporting date.
When the Group reviewed impairment indicators, consideration was also given for negative trends in the significant
judgements and assumptions that may impact the CGU’s valuation in future periods, including:
/ expected future cash flows based on a range of factors including Board-approved internal budgets and forecasts
which reflect expectations of resources and reserves; mine plans; short and long-term commodity prices and foreign
exchange rates; and operating and capital costs
/ the value of mineral resources not modelled in Board-approved budgets, based on the use of an appropriate
resource valuation multiple to the contained copper equivalent within the resources applicable to the CGU
/ the discount rate applied to the cash flows which reflects current market conditions.
In addition, the Consolidated Entity monitors impairment indicators by considering the impact of the above judgements
and assumptions on the valuation of CGUs through periodic updates to its business valuation models.
Such assumptions are subject to variation as a result of changes in future economic and operational conditions.
Consequently, the carrying value of the Consolidated Entity’s CGUs may differ in future years if assumptions made
do not eventuate and actual outcomes are less favourable than present assumptions.
Depreciation methods adopted by the Consolidated Entity
Category
Freehold land
Depreciation method
Not depreciated
Buildings and other infrastructure
Straight line over life of mine
Short term plant and equipment
Straight line over life of asset
Processing plant
Units of ore milled over mining inventory
Mine property and development
Units of ore extracted over mining inventory applicable to the development
Depreciation of assets commences when the assets are ready for their intended use. The depreciation
of mine property and development commences when the mine is commissioned or deemed ready
for use.
The residual values, useful lives and methods of depreciation of property, plant and equipment are
reviewed at each reporting period and adjusted prospectively, if appropriate. Where depreciation
rates are changed, the net written down value of the asset is depreciated from the date of the
change in accordance with the new depreciation rate, with the change accounted for as a change
in accounting estimate.
8. Exploration assets
CARRYING VALUE OF CAPITALISED EXPLORATION EXPENDITURE
The accounting policy for exploration and evaluation expenditure requires judgement to determine whether future
economic benefits are likely from either future exploitation or sale, or whether activities have not reached a stage that
permits a reasonable assessment of the existence of reserves. In the event future economic benefits are unlikely or a
reasonable assessment of the existence or otherwise of economic reserves is not possible, an impairment test may be
required which may result in an adjustment to the carrying value of capitalised exploration expenditure.
The ultimate recoupment of costs capitalised for exploration and evaluation phases is dependent on successful
development and commercial exploitation or sale of the respective area of interest.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 130
FINANCIAL REPORT
Exploration Assets
Opening balance at 1 January
Acquired during the year
Additions during the year
Transferred from Other assets
Foreign currency exchange difference
Closing balance 31 December
2019
$m
78.1
–
26.2
6.9
0.9
112.1
2018
$m
–
75.0
–
–
3.1
78.1
Acquisition through business combinations and associated foreign currency exchange differences have been restated upon completion of
purchase price allocations at fair value and exploration assets of $75.0 million have been recognised as at acquisition date. Exploration assets
of $6.9 million were included in other assets in prior year.
Recognition and measurement of exploration expenditure
Exploration and evaluation expenditure is recognised in the Income Statement as incurred, unless it is
expected to be recouped through successful development and exploitation of the area of interest, or
alternatively by its sale, in which case it is recognised as an asset on an area of interest basis, or the
exploration asset is acquired in a business combination.
Exploration and evaluation assets are classified as tangible according to the nature of the assets.
Exploration and evaluation assets are not depreciated and are assessed for impairment when facts
and circumstances suggest that the carrying amount exceeds the recoverable amount.
For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-
generating units to which the exploration activity relates. A Cash Generating Unit (CGU) is not
larger than the area of interest. Once the technical feasibility and commercial viability of the
extraction of mineral reserves in an area of interest are demonstrated, exploration and evaluation
assets attributable to that area of interest are first tested for impairment and then reclassified to
mine property and development assets within property, plant and equipment.
From time to time the Consolidated Entity enters into arrangements which enable it to secure the
opportunity to explore and potentially earn the right to mineralisation if discovered on underlying
exploration tenements held by other entities (earn-in arrangements). Under the agreements,
OZ Minerals does not assume any liabilities or hold any rights to other assets that the holder of
the tenement may possess. Expenditure is accounted for under OZ Minerals accounting policy for
exploration and evaluation expenditure.
9. Right-of-use assets
Recognised upon transition to AASB 16 at 1 January 2019
Additions to right -of-use assets
Derecognition during the year
Depreciation charge for the year
Depreciation capitalised to capital work in progress during the year
Closing carrying amount at 31 December 2019
Property
$m
Plant &
equipment
$m
31 December
2019
Total $m
5.1
1.8
–
(0.7)
–
6.2
89.2
122.3
(1.6)
(22.6)
(17.4)
169.9
94.3
124.1
(1.6)
(23.3)
(17.4)
176.1
The right-of-use (ROU) assets include office space, mining equipment leases contained in mining
service contracts, and powerline infrastructure.
OZ MINERALS 131
Recognition and measurement of right-of-use assets
AASB 16 eliminates the distinction between operating and finance leases and brings all leases
(other than short term and low value leases) onto the balance sheet. As a lessee, the Consolidated
Entity recognises a right-of-use asset representing its right to use the underlying asset and a lease
liability representing its obligation to make lease payments. Short term and low value leases are
expensed in the consolidated statement of comprehensive income on a straight-line basis over the
life of the lease.
The Group recognises a right-of-use (ROU) asset and a lease liability at the lease commencement
date. The right-of-use asset is initially measured at cost (present value of the lease liability, deemed
cost of acquiring the asset and restoration or make good cost), and subsequently at cost less any
accumulated depreciation, impairment losses and adjustments for remeasurement of the lease
liability. The ROU assets are depreciated over the life of the lease which generally ranges between
1 to 20 years. The lease liability is initially measured at the present value of the lease payments
expected to be paid over the lease term, discounted using the interest rate implicit in the lease or,
if that rate cannot be readily determined, the entity’s incremental borrowing rate. The lease liability
is subsequently increased by the interest cost on the lease liability and decreased by lease payments
made. The lease liability is further remeasured if the estimated future lease payments change as a
result of index or rate changes, residual value guarantees or the likelihood of exercising purchase,
extension or termination options.
EXTENSION AND RENEWAL OF LEASE
The Consolidated Entity has applied judgement to determine the lease term for lease contracts that include renewal
options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term,
which affects the measurement of lease liabilities and right-of-use assets recognised.
Where practicable, the Group seeks to include extension options in new leases to provide operational flexibility.
The extension options held are exercisable only by the Group and not by the lessors. The Group assesses at lease
commencement date whether it is reasonably certain to exercise the extension options. The Group also reassesses
whether it is reasonably certain to exercise the options if there is a significant event or significant changes in
circumstances within its control.
The Group has estimated that the potential future lease payments, should it exercise the available
extension options, would result in an increase in the lease liability amount of $16.9 million.
10. Provisions
MINE REHABILITATION, RESTORATION & DISMANTLING OBLIGATIONS
The provision for mine rehabilitation includes future cost estimates associated with reclamation, plant closures, waste
site closures, monitoring, demobilisation of equipment, decontamination, water purification and permanent storage of
historical residues.
Uncertainty exists as to the amount of rehabilitation obligations which will be incurred due to the impact of
environmental legislation changes and many other factors, including future changes in technology, price increases
and changes in interest rates. The calculation of these provision estimates requires assumptions to be made as to the
application of environmental legislation, plant closure dates, available technologies, engineering cost estimates and
discount rates. A change in any of the assumptions used may have a material impact on the carrying value of mine
rehabilitation, restoration and dismantling provisions.
Recognition and measurement of provisions
Provisions are measured at the present value of the best estimate of the expenditure required to
settle the present obligation at balance sheet date. The discount rate used to determine the present
value reflects current market assessments of the time value of money and the risks specific to the
liability. The increase in provisions due to the passage of time is recognised in the income statement
as financing expenses.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 132
FINANCIAL REPORT
Provisions are made for the estimated cost of rehabilitation, decommissioning and restoration of
areas disturbed during mining and exploration operations up to the reporting date for areas not yet
rehabilitated. Provisions for mine rehabilitation are based on the current estimated cost to rehabilitate
such areas, discounted to their present value based on expected future cash flows. The estimated
costs include the current cost of rehabilitation necessary to meet legislative requirements. Changes in
estimates are dealt with on a prospective basis as they arise. The provision is recognised as a liability,
separated into current (estimated costs arising within 12 months) and non- current components
based on the expected timing of these cash flows.
Current
Other provisions
Total current provisions
Non-current
Other provisions
Mine rehabilitation
Total non-current provisions
Total provisions
Aggregate
Other provisions
Mine rehabilitation
Total provisions
Reconciliation of provisions
Opening carrying amount
Unwind of discount
Provisions utilised
Provisions increase/(decrease)
Closing carrying amount
2019
$m
1.0
1.0
9.6
87.8
97.4
98.4
10.6
87.8
98.4
2018
$m
3.9
3.9
12.4
46.9
59.3
63.2
16.3
46.9
63.2
Mine rehabilitation provision
46.9
3.6
–
37.3
87.8
11. Commitments
The Consolidated Entity has entered into an agreement with ElectraNet for the transmission of
power and the build, own, operation and maintenance of electricity transmission infrastructure
to Carrapateena and Prominent Hill. The total future commitment for these arrangements is
$538.9 million. Once electricity infrastructure construction is completed it is expected that a right
of use asset and lease liability will be recognised.
In addition, the Consolidated Entity has entered into various contracts with suppliers for the
construction of the Carrapateena and Carajás mines and sustaining mine development at the
Prominent Hill, Carrapateena and Carajás mines. The total capital expenditure commitment in relation
to these contracts as at 31 December 2019 was $707.3 million (2018: $303.0 million), of which
$207.5 million is expected to be incurred in 2020.
OZ MINERALS
133
Contributed equity
12. Issued capital
323,874,831 shares (2018: 322,899,831 shares)
Share capital movement
31 December 2019
Opening balance at 1 January
Shares issued on 16 January
2019
$m
2,280.4
2018
$m
2,280.4
Number
of shares
Share capital
$m
322,899,831
975,000
2,280.4
–(a)
Closing balance as at 31 December
(a) The increase in equity associated with employee share plan is accounted for as set out in Note 13. Shares granted are valued on grant date
323,874,831
2,280.4
and accounted under share-based payment expense.
31 December 2018
Opening balance at 1 January
Shares issued under business combination on:
21 June
26 June
28 June
2 July
4 July
6 July
10 July
12 July
8 August
13 July Shares issued under employee share plan
Number
of shares
Share capital
$m
298,664,750
2,029.0
20,518,559
216.4
312,923
298,053
161,857
44,835
201,862
858,650
599,534
538,808
700,000
3.1
2.9
1.6
0.4
1.9
8.0
5.6
5.1
6.4
Closing balance as at 31 December
322,899,831
2,280.4
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up
of the Company in proportion to the number of shares held. On a show of hands, every holder of
ordinary shares present at a meeting in person or by proxy is entitled to one vote, and upon a poll
each holder is entitled to one vote per share.
Recognition and measurement of issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares or options are shown within equity as a deduction.
Shares bought and held by the Employee Share Plan Trust to meet the Consolidated Entity’s
obligation to provide shares to employees in accordance with the terms of their employment
contracts and employee share plans as and when they may vest, are classified as treasury shares
and are presented as a deduction from total equity, until the shares are cancelled or reissued.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 134
FINANCIAL REPORT
13. Share-based payments
The total expense arising from share-based payment transactions recognised during the year as part of employee benefit expenses was
$8.0 million (2018: $4.7 million). A description of OZ Minerals’ principal performance rights plans (PRP) and long term incentive plans
(LTIP) is provided below.
Element
Performance rights granted under PRP
Performance rights granted under LTIP
Performance period
Service period
2019: 1 July 2019 to 1 July 2020
2018: 1 July 2018 to 1 July 2019
2017: 1 July 2017 to 1 July 2018
2019: 1 July 2019 to 1 July 2020
2018: 1 July 2018 to 1 July 2019
2017: 1 July 2017 to 1 July 2018
Vesting conditions
Percentage vesting based on individual
performance against Key Performance Indicators
Exercise price
2019: 1 January 2019 to 31 December 2021
2018: 1 January 2018 to 31 December 2020
2017: 1 January 2017 to 31 December 2019
2019: 1 January 2019 to 31 December 2021
2018: 1 January 2018 to 31 December 2020
2017: 1 January 2017 to 31 December 2019
1. Total shareholder return (TSR)
TSR performance measured
Comparator Group
Less than 50th percentile
50th percentile
Between the 50th and
75th percentile
75th percentile or greater
2. All-In Sustaining Costs (AISC)(a)
OZ Minerals AISC over
the performance period
Above 50th percentile
50th percentile
Between 50th percentile
and 25th percentile (Lowest cost)
25th percentile or below
Nil
Percentage of vesting
Nil
50%
Straight-line vesting between 50%
and 100%
100%
Percentage of vesting
Nil
50%
Straight line vesting between 50%
and 100%
100%
(a) The LTI Plan performance vesting conditions for 2016, 2017 and 2018 were set on both TSR and absolute share price growth, weighted at 70% and 30% respectively. The 2019 LTI Plan was
set on TSR and All-In Sustaining Costs, weighted at 70% and 30% respectively.
Performance rights granted under the PRPs or LTIPs do not include dividends or voting rights. All performance rights under current
performance rights plans are automatically exercised upon vesting which is dependent upon meeting both the service condition and
the performance condition. When issued, the shares on vesting of performance rights rank equally in all respects with previously issued,
fully paid ordinary shares.
The fair value of services received in return for share-based payments granted during the year is based on the fair value of the
performance rights granted, measured using a binomial approximation option valuation model and Monte-Carlo simulation valuation
model for performance rights plans and long-term incentive plans respectively. The models use the following inputs:
OZ MINERALS 135
Grant date
Performance rights granted under the LTIP
1 January 2019
MD & CEO Tranche One (70%)
MD & CEO Tranche Two (30%)
Other KMP Tranche One (70%)
Other KMP Tranche Two (30%)
1 January 2018
MD & CEO Tranche One (70%)
MD & CEO Tranche Two (30%)
Other KMP Tranche One (70%)
Other KMP Tranche Two (30%)
1 January 2017
MD & CEO Tranche One (70%)
MD & CEO Tranche Two (30%)
Other KMP Tranche One (70%)
Other KMP Tranche Two (30%)
Performance rights granted under the PRP
1 July 2019
1 July 2018
1 July 2017
Performance rights
Fair value at
grant date
$
Share price
at grant date
$
Expected
volatility
%
Expected
dividends
%
Risk-free
interest rate
%
6.2
8.6
6.2
8.6
6.4
4.5
6.7
4.5
4.6
3.5
6.5
5.6
9.9
9.3
7.3
9.2
9.2
9.2
9.2
9.0
9.0
8.8
8.8
7.2
7.2
9.2
9.2
10.3
9.5
7.5
31.0
31.0
31.0
31.0
45.0
45.0
45.0
45.0
50.0
50.0
50.0
50.0
28.0
45.0
50.0
2019
Number
2,047,737
1,209,771
(955,377)
(116,748)
2,185,383
2.5
2.5
2.5
2.5
2.2
2.2
2.2
2.2
2.7
2.7
2.2
2.2
2.2
2.1
2.6
1.1
1.1
1.1
1.1
2.2
2.2
2.1
2.1
1.7
1.7
2.0
2.0
1.0
2.0
1.8
2018
Number
2,006,254
1,011,190
(762,005)
(207,702)
2,047,737
The movement in the number of performance rights during the year
Opening balance
Rights granted
Rights vested
Rights forfeited
Closing balance
Recognition and measurement of share-based payments
The fair value of share-based payment transactions measured at grant date are recognised as an employee benefit expense with a
corresponding increase in equity over the period during which the employees become unconditionally entitled to the instruments.
If the employee does not meet a non-market condition, such as a service condition or internal KPI, any cumulative previously recognised
expense is reversed.
The fair value of the share-based payment transactions granted are adjusted to reflect market vesting conditions at the time of grant and
are not subsequently adjusted. Non-market vesting conditions are included in assumptions about the number of instruments that are
expected to become exercisable and are updated at each balance sheet date. The impact of the revision to original estimates for non-
market conditions, if any, is recognised in the income statement with a corresponding adjustment to equity. Changes as a result of market
conditions are not adjusted after the initial grant date.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 136
FINANCIAL REPORT
Risk management
14. Financial risk management
OZ Minerals’ Group Treasury Function (Group Treasury) evaluates and manages financial risks for
the Group in close co-operation with OZ Minerals’ operating units. The Board approves principles
for overall risk management as well as policies covering specific risk areas such as commodity
markets, financial markets, counterparty credit risk and liquidity risk.
This note presents information about the Consolidated Entity’s financial assets and liabilities,
its exposure to financial risks, and its objectives, policies and processes for measuring and
managing risks.
The Consolidated Entity’s activities expose it primarily to the following financial risks:
/ commodity prices
/ foreign currency exchange rates
/ counterparty credit risk
/ liquidity risk.
The Consolidated Entity holds the following financial instruments
Carried at fair value using level
one valuation technique (based on
share prices quoted on the relevant
stock exchanges)
Carried at fair value using level two
valuation technique (quoted market
prices of copper, gold and silver adjusted
for specific settlement terms)
Investments in equity securities
Trade receivables
Derivative financial instruments
Carried at amortised cost
Cash and cash equivalents(a)
Other receivables(a)
Trade payables(a)
Other payables(a)
Lease liabilities
(a) The carrying value of each of these items approximates fair value.
Recognition and measurement
Financial assets and liabilities are recognised when the Consolidated Entity becomes party to the
contractual provisions of an instrument.
Non-derivative financial assets
The Consolidated Entity classifies its financial assets as:
/ financial assets at fair value through other comprehensive income
/ financial assets at fair value through profit and loss
/ loans and receivables at amortised cost.
Financial assets measured at amortised cost are recognised initially at fair value plus any directly
attributable transaction costs.
Trade receivables, including those containing an embedded derivative, are carried at fair value.
Concentrate sales receivables are recognised in accordance with the recognition and measurement
criteria disclosed in Note 1. Provisional payments in relation to trade receivables are usually due within
30 days from the date of invoice issue, with final settlement usually due within 90 days.
Other receivables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method.
OZ MINERALS 137
The Consolidated Entity de-recognises a financial asset or a part of it when, and only when, the
contractual rights to the cash flows from the financial asset or part of it expires or, the financial asset
is transferred to another party without retaining control or substantially all risks and rewards of the
asset. On de-recognition of a financial asset, the difference between the carrying amount (measured
at the date of de-recognition) and the consideration received (including any new asset obtained less
any new liability assumed) and any cumulative gain or loss that had been recognised in equity is
recognised in the income statement.
A financial asset measured at amortised cost is assessed at each reporting date as to whether there
is any objective evidence of impairment as a result of one or more events having an impact on the
estimated future cash flows of the asset. An impairment loss is recognised for any expected credit
loss for the lifetime of the financial asset, accounted for at amortised cost or fair value through other
comprehensive income. Credit losses are measured on the present value of all cash shortfalls between
the cash flows due to the entity in accordance with the contract and the expected cash flows.
Non-derivative financial liabilities
All financial liabilities are recognised initially at fair value and net of directly attributable transaction
costs. Trade and other payables represent liabilities for goods and services provided to the
Consolidated Entity prior to the end of the financial year which are unpaid. The amounts are non-
interest-bearing, unsecured and are usually paid within 30 days of recognition. Lease liabilities are
recognised at net present value and reduced by the actual payment made (refer Note 9).
The Consolidated Entity de-recognises financial liabilities when its obligations are discharged,
cancelled or expire. The difference between the carrying amount of the liability de-recognised
and the consideration paid and payable is recognised in the income statement.
In the event that an impairment loss is reversed, the asset’s carrying amount cannot exceed what the
carrying amount would have been had the impairment not been recognised. The amount of reversal
is recognised in the income statement.
Derivative financial instruments
Derivative financial instruments are initially recognised at fair value on the date the derivative contract
is entered into and are subsequently remeasured to their fair value at each reporting date. Changes
in the fair value of any derivative instrument are recognised in the income statement unless the
derivative is designated as a hedging instrument in a hedge relationship.
Formal designation of the hedge and documentation of the relationship between the hedging
instrument and the hedged item is finalised at the inception of the transaction.
Changes in the fair value of a derivative financial instrument, which has been designated in a
cashflow hedge relationship, will be recognised in other comprehensive income to the extent the
hedging relationship remains effective and the underlying hedge item has not been recognised in
the income statement, or will be recognised in the income statement if the hedge relationship is no
longer effective or the underlying hedged item has been recognised in the income statement. Any
ineffective portion of changes in the fair value of derivative financial instruments will be recognised
immediately in the income statement. The amount recognised in other comprehensive income is
reclassified to the income statement in the same period as the underlying item is recognised in the
income statement.
Commodity price risk management and sensitivity analysis
The Consolidated Entity is exposed to commodity price volatility on the sale of metal in concentrates
such as copper and gold, which are priced on, or benchmarked to, open market exchanges.
During the 2019 financial year, OZ Minerals aimed to realise the forward copper price at the time of
shipment of concentrates to customers, that matched the quotation period of the underlying sale.
Gold derivative contracts
OZ Minerals has entered into gold forward contracts to fix the price in AUD of around 38% of
forecast sales (gold oz.) in the period from 2020 to 2021 and around 38% of the gold contained
in stockpiles at 31 December 2019.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 138
FINANCIAL REPORT
The forward contracts have been designated as cash flow hedges under AASB 9 and were assessed
to be fully effective in managing the underlying risk. Accordingly, a tax-effected fair value reduction
of $52.0 million was recognised in other comprehensive loss and $23.9 million was transferred
out of Cash flow hedge reserve to profit and loss during 2019. At 31 December 2019, contracts
for 162,450 ounces of gold were outstanding with an average strike price of $1,753 per ounce, as
reflected in the chart below:
Forward contracts (gold oz)
Average contract forward price (A$ per gold oz)
33,000
28,000
23,000
18,000
13,000
8,000
)
z
o
d
o
g
(
l
s
t
c
a
r
t
n
o
c
d
r
a
w
r
o
F
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
F
o
r
w
a
r
d
P
r
i
c
e
(
A
U
D
p
e
r
g
o
d
o
z
)
l
1,850
1,810
1,770
1,730
1,690
1,650
A hedge relationship which is established at inception is assessed for effectiveness in managing the
underlying risk. Where a derivative has expired or is assessed to be ineffective, all future fair value
changes will be recognised in the income statement. Significant judgement is exercised regarding
mine plans, sales forecasts and recoverable metal contained in mineral resources and reserves when
determining a hedge relationship’s effectiveness.
Copper derivative contracts
During the financial year, the Consolidated Entity managed its exposure to copper price volatility
between revenue recognition and contractual quotation pricing by entering into copper derivative
contracts at the time of concentrate sales. The copper derivative contracts fix the forward price at
the time of sale. These derivative contracts are designated as hedges and are recognised within the
income statement as part of revenue.
Commodity price sensitivity analysis
The analysis below reflects the impact of movements in gold prices. Variations in silver prices have
been deemed immaterial for the purpose of this analysis. In accordance with Australian Accounting
Standards, the sensitivity analysis is on all financial assets and liabilities deemed material to the
Consolidated Entity.
+10% movement in gold prices
-10% movement in gold prices
Impact on income
statement
net of tax
Impact on other
comprehensive income
net of tax
Impact on income
statement
net of tax
Impact on other
comprehensive income
net of tax
1.2
–
1.2
0.9
–
0.9
–
(35.5)
(35.5)
–
(44.8)
(44.8)
(1.2)
–
(1.2)
(0.9)
–
(0.9)
–
35.5
35.5
–
44.8
44.8
A 10% movement in gold prices, which is based on reasonably possible changes over a financial year
and reflects the variability management applies in forecasting sensitivity, results in a $1.2 million
after tax impact in the income statement on the trade receivables balance of $83.1 million (2018:
$70.9 million) and has a $35.5 million after tax impact on the derivative financial liability of
$70.6 million (2018: $15.6 million). In accordance with accounting standards, the impact has been
calculated on the outstanding balance that is subject to commodity price risk and does not include
the impact of the movement in commodity prices on the total revenue for the year.
2019
Trade receivables
Gold hedges (FECs)
Total
2018
Trade receivables
Gold hedges (FECs)
Total
OZ MINERALS
139
Foreign currency exchange risk management and sensitivity analysis
The Consolidated Entity is exposed to foreign currency risk arising from assets and liabilities that
are held in currencies other than the Australian dollar (primarily USD and Brazilian Real).
The Group’s principal operations have a functional currency of Australian dollars. An entity’s
functional currency is the currency of the primary economic environment in which the entity operates.
Determination of an entity’s functional currency requires management’s judgement and considers a
number of factors, including the currency that mainly influences revenue, costs of production, and
competitive forces and regulations which impact on revenue. In addition, consideration must be given
to the currency in which financing and operating activities are undertaken.
All exchange differences that arise on translating results and the financial position of all entities
within the Consolidated Entity that have a functional currency different from the presentation
currency are recognised as a separate component of equity in the foreign currency translation reserve.
When a foreign operation is sold a proportionate share of such exchange differences is recognised in
the Income Statement as part of the gain or loss on sale where applicable.
Foreign currency transactions are translated into the functional currency using exchange rates
prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end exchange rates of financial
assets and liabilities denominated in foreign currencies are recognised in the income statement. The
carrying amount of the Consolidated Entity’s financial assets and financial liabilities by their currency
risk exposure at the reporting date are disclosed below.
2019
Cash and cash equivalents
Trade receivables
Trade payables
Derivative financial instruments
Total
2018
Cash and cash equivalents
Trade receivables
Trade payables
Derivative financial instruments
Total
Exchange rates during the year
AUD:USD
AUD:BRL
Denominated in US$
presented in A$m
Other currencies
presented in A$m
25.2
82.7
(0.3)
(83.1)
24.5
88.1
69.3
(0.5)
(15.6)
141.3
6.5
–
(12.6)
–
(6.1)
10.0
–
(5.5)
–
4.5
Total
A$m
31.7
82.7
(12.9)
(83.1)
18.4
98.1
69.3
(6.0)
(15.6)
145.8
Average rate
31 December spot rate
2019
0.6952
2.7421
2018
0.7479
2.7428
2019
0.7006
2.8239
2018
0.7058
2.7319
At reporting date, if the foreign currency exchange rates strengthened/(weakened) against the
functional currency by 5% and all other variables were held constant, the Consolidated Entity’s after
tax profit would have changed by $3.8 million and other comprehensive income would have changed
by $2.9 million (2018: $0.5 million after tax profit; $0.6 million other comprehensive income).The
sensitivity analysis includes only outstanding foreign currency denominated monetary items at the
reporting date and adjusts their translation for a 5% change in the foreign currency rate.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 140
FINANCIAL REPORT
Interest rate risk management and sensitivity analysis
The Consolidated Entity did not have any debt as at 31 December 2019 and therefore is not exposed
to interest rate risk on borrowings. However, loans and borrowings include lease liabilities recognised
under AASB 16 which are subject to discounting. The Consolidated Entity carries term deposits
with fixed interest rates. The effect of a change in interest rates at balance date would not have a
significant impact on the after-tax profit as all cash deposits have fixed interest rate terms.
Credit risk management
Credit risk refers to the risk that any counterparty will default on its contractual obligations resulting
in financial loss to the Consolidated Entity. Counterparty credit risk arises through sales of metal in
concentrate on normal terms of trade, investment of cash and derivative financial instruments.
The credit risk on cash and cash equivalents and derivative financial instruments is managed by
restricting financial transactions to relationship banks which have Board approved exposure limits
and a minimum credit rating assigned by an internationally recognised credit rating agency.
Credit risk in trade receivables is managed by restricting trade credit to Board approved exposure
limits with customers that have a minimum credit rating or trade credit that is secured by a letter
of credit from a bank with an acceptable credit rating.
As there are a relatively small number of transactions, they are closely monitored to ensure risk of
default is kept to an acceptable level. Sales contracts generally require a provisional payment of
at least 90% of the estimated value of each sale either promptly after vessel loading or upon the
vessel arriving at the discharge port.
Maximum exposure to credit risk for trade receivables at the reporting date by customer
geographic region
Europe
Asia
Australia
Total
2019
$m
0.2
73.5
9.4
83.1
2018
$m
7.2
44.6
19.1
70.9
Three major customers (2018: two) who individually accounted for more than 10% of total revenue
contributed approximately 81% of total revenue (2018: 64%). These customers also represent 94%
of the trade receivables balance as at 31 December 2019 (2018: 88%). There were no instances
of customer default during 2019 and there are no significant receivables which are past due at the
reporting date.
Liquidity risk management
Liquidity risk is the risk of encountering difficulty in meeting obligations associated with financial
liabilities. OZ Minerals manages liquidity risk by conducting regular reviews of the timing of cash
outflows, the maturity profiles of term deposits and maintaining committed available bank credit to
ensure sufficient funds are available to meet its obligations.
The following table reflects all contractual repayments from recognised financial assets and liabilities
at the reporting date, including derivative financial instruments. The market value is presented for
derivative financial instruments, whereas for other obligations the respective undiscounted cash flows
for the upcoming financial years are presented.
OZ MINERALS 141
2019
Non-derivative financial instruments
Cash and cash equivalents
Trade receivables
Other receivables
Trade payables
Lease liabilities
Derivative financial instruments
Derivative financial liabilities
Total
2018
Non-derivative financial instruments
Cash and cash equivalents
Trade receivables
Other receivables
Trade payables
Derivative financial instruments
Derivative financial asset
Derivative financial liabilities
Total
Carrying amount
Less than 1 year
1–2 years
2–5 years
>5 years
Total
Contractual cashflows
134.0
83.1
23.4
(168.6)
(183.9)
(83.1)
(195.1)
505.1
70.9
28.6
(145.1)
17.9
(33.5)
443.9
134.0
83.1
23.4
(168.6)
(43.0)
(60.4)
(31.5)
505.1
70.9
28.6
(145.1)
17.9
(9.3)
468.1
–
–
–
–
–
–
–
–
(27.5)
(68.0)
(22.7)
(50.2)
–
(68.0)
–
–
–
–
–
(16.6)
(16.6)
–
–
–
–
–
(7.6)
(7.6)
–
–
–
(82.8)
–
(82.8)
–
–
–
–
–
–
–
134.0
83.1
23.4
(168.6)
(221.3)
(83.1)
(232.5)
505.1
70.9
28.6
(145.1)
17.9
(33.5)
443.9
Loans and Borrowings
The consolidated entity recognised lease liabilities for right-of-use (ROU) assets under AASB 16 for the first time as at 1 January 2019 and
subsequently any new ROU lease contracts as they have been entered into. When lease contracts are terminated or altered, the unpaid
lease liability and net carrying value of ROU assets is derecognised.
Other borrowings 2019
$m
Lease liabilities 2019
$m
Total 2019
$m
Opening balance 1 January 2019
Lease liabilities recognised on transition to AASB 16 “Leases”
Bank overdraft facilities
Lease recognised during the period
Accretion of interest
Lease terminations during the period
Repayment during the period
Closing balance at 31 December 2019
Closing balance at 31 December 2019
–
–
3.7
–
–
–
(3.7)
–
–
105.2
–
124.1
1.5
(1.8)
(45.1)
183.9
Current
$m
37.8
Non-current
$m
146.1
The Consolidated Entity had access to the following borrowing facilities which were undrawn at the end of the year:
Revolving facility
Expires on
April, 2022
Security
Unsecured
2019
A$m
300.0
–
105.2
3.7
124.1
1.5
(1.8)
(48.8)
183.9
Total $m
183.9
2018
A$m
100.0
During the period the Consolidated Entity entered into a committed, unsecured three year $300 million revolving credit facility with a
syndicate of banks to support funding of its growth strategy and working capital requirements. In addition, the Consolidated Entity
entered into bank guarantee facilities for a total of $450 million. Details of guarantees provided are set out in Note 15.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 142
FINANCIAL REPORT
15. Contingencies
CONTINGENCIES
By their nature, contingencies will only be resolved when one or more uncertain future events occur or fail to occur.
Determination of contingent liabilities disclosed in the financial statements requires the exercise of significant
judgement regarding the outcome of future events and the financial results of OZ Minerals in future periods may be
impacted unfavourably in the event of an unfavourable outcome of a number of matters outlined in this note.
Bank guarantees
OZ Minerals Group Treasury Pty Ltd has provided certain financial bank guarantees to third parties,
associated with the terms of mining leases, power infrastructure contracts, exploration licences and
office leases, in respect of which the relevant entity is obliged to indemnify the bank if the guarantee
is called upon. At the end of the financial year, no claims have been made under any of these
guarantees. The amount of some of these guarantees may vary from time to time depending upon
the requirements of the recipient. These guarantees amounted to $369.2 million as at 31 December
2019 (31 December 2018: $209.1 million) and are issued under bilateral bank facilities that are rolled
forward each twelve months.
Deeds of indemnity
The Consolidated Entity has granted indemnities under deeds of indemnity with current and former
executive and non-executive directors, current and former officers, the former General Counsel–
Special Projects, former Group Treasurers and each employee who was a director or officer of a
controlled entity of the Consolidated Entity, or an associate of the Consolidated Entity, in conformity
with Rule 10.2 of the OZ Minerals Limited Constitution.
Each deed of indemnity indemnifies the relevant director, officer or employee to the fullest extent
permitted by law for liabilities incurred while acting as an officer of OZ Minerals, its related bodies
corporate and any associated entity, where such an office is or was held at the request of the
Company. Under these indemnities, the Company meets the legal costs incurred by company
officers in responding to investigations by regulators and may advance funds to meet defence
costs in litigation, to the extent permitted by the Corporations Act 2001 (Cth).
Warranties and indemnities
The Consolidated Entity has given certain warranties and indemnities to the purchasers of assets and
businesses that have been sold. Warranties have been given in relation to various matters including
the sale of assets, taxes and information. Indemnities have also been given by the Consolidated Entity
in relation to matters including compliance with law, environmental claims, a failure to transfer or
deliver all assets, and payment of taxes.
Former Cambodian operations
The Australian Federal Police (AFP) advised OZ Minerals in September 2014 that it was conducting
an investigation of OZ Minerals’ 2009 acquisition of the remaining equity holding in the Okvau
exploration joint venture in Cambodia in relation to foreign bribery claims. Since that time, the
Company has been advised by the AFP that the scope of the AFP’s investigation has been extended
to OZ Minerals’ former Cambodian operations generally. OZ Minerals understands that the AFP
is continuing its investigation and OZ Minerals is continuing to fully cooperate with the AFP.
OZ Minerals has concluded that it is not probable that a present obligation exists and, accordingly,
no provision has been recognised in the balance sheet at 31 December 2019.
Other
OZ Minerals Limited and its controlled entities are defendants from time to time in other legal
proceedings or disputes, arising from the conduct of their business. OZ Minerals does not consider
that the outcome of any of these proceedings or disputes is likely to have a material effect on
OZ Minerals’ or the Consolidated Entity’s financial position.
OZ MINERALS 143
Group structure and
other information
16. Subsidiary acquisition
OZ Minerals acquired 100% of Avanco Resources Limited’s (Avanco) shares in 2018 and initially
recognised all the acquired assets and liabilities of Avanco at their fair values or provisional fair values
as disclosed in the 31 December 2018 annual report. Subsequently the Company conducted detailed
valuations of the assets and liabilities acquired as at the acquisition date which resulted in a change
of classification of exploration assets and property, plant and equipment. The fair value of net assets
acquired remains unchanged.
Note
Provisional
fair value
recognised
$m
Fair value
adjustment
$m
Final fair
value
$m
Cash and cash equivalents
Trade receivables
Other receivables
Inventories
Prepayments
Other assets
Exploration assets
8
Property, plant and equipment
Total assets
Trade payables and accruals
Other payables & current provisions
Current tax provision
Deferred tax liabilities
Non-current provisions
Total liabilities
Net identifiable assets acquired
39.1
1.6
5.6
15.2
1.4
5.4
–
615.5
683.8
11.6
22.6
1.0
170.1
11.1
216.4
467.4
–
–
–
–
–
–
75.0
(75.0)
–
–
–
–
–
–
–
–
39.1
1.6
5.6
15.2
1.4
5.4
75.0
540.5
683.8
11.6
22.6
1.0
170.1
11.1
216.4
467.4
As a result of the revision to the fair values recognised, the comparative information in the balance
sheet at 31 December 2018 has been reclassified as follows:
Consolidated Balance sheet at
31 December 2018
Non-current assets
Property, plant and equipment
Exploration assets
As previously
reported
$m
Adjustment
$m
As reclassified
$m
2,077.6
–
(78.1)
78.1
1,999.5
78.1
Exploration assets at 31 December 2018 of $78.1 million includes a foreign currency translation
adjustment of $3.1 million since 30 June 2018.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 144
FINANCIAL REPORT
17. Parent entity disclosures
As at, and throughout the financial year ended 31 December 2019, the parent entity of the
Consolidated Entity was OZ Minerals Limited.
Net reversal of provision for non-recovery of loan to subsidiary
Dividend income
Net other expense
Net profit/(loss) for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss)
Financial position of the parent entity
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Treasury shares
Retained earnings
Accumulated losses
Total equity
2019
$m
14.1
250.0
(10.5)
253.6
(7.6)
246.0
7.1
2,482.3
2,489.4
22.8
9.0
31.8
2018
$m
101.7
–
(9.1)
92.6
(6.7)
85.9
6.7
2,281.6
2,288.3
11.8
0.4
12.2
2,457.6
2,276.1
2,280.4
–
417.1
(239.9)
2,457.6
2,280.4
(1.2)
245.4
(248.5)
2,276.1
OZ Minerals Limited is able to manage its net current liability position by its ability to control the
timing of dividends from its subsidiaries.
Refer to Note 15 for Contingencies and Note 19 for Deed of Cross Guarantee disclosures.
The parent entity’s capital expenditure commitment as at 31 December 2019 was nil (2018: nil).
Franking account details
Franking account balance at beginning of year
Franking credits from income tax paid during the year
Franking debits from income tax refund received
Franking debits from franked dividends paid during the year
Franking account balance at end of year
2019
$m
171.9
46.8
(2.7)
(31.9)
184.1
2018
$m
54.5
148.5
(2.1)
(29.0)
171.9
OZ MINERALS 145
18. Basis of consolidation
Investments in subsidiaries
Subsidiaries are those entities over which the Consolidated Entity is capable of exerting control. The Consolidated Entity controls an
entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. Where the Consolidated Entity holds less than a majority of the voting rights, other relevant
factors are considered in assessing whether power over the entity exists. Factors considered include rights arising from other contractual
arrangements, any contractual arrangements with other vote holders as well as the Consolidated Entity’s voting and potential voting rights.
The Consolidated Entity reassesses whether it controls an entity if circumstances indicate that there has been a change in one of the factors
which indicate control. Subsidiaries are consolidated from the date on which control is assessed to exist until the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Consolidated Entity.
Intercompany transactions, balances and unrealised gains and losses on transactions between companies controlled by the Consolidated
Entity are eliminated on consolidation.
Subsidiaries
The wholly-owned controlled entities of OZ Minerals Limited are listed below:
Entity
Country of incorporation
Entity
Country of incorporation
OZ Minerals Brazil (Holdings) Pty Ltd
Australia
CTP Operations Pty Ltd
Avanco Resources Pty Ltd
Avanco Holdings Pty Ltd
Estrela Metals Pty Ltd
AVB Copper Pty Ltd
AVB Brazil Pty Ltd
AVB Carajas Pty Ltd
AVB Minerals Pty Ltd
Estrela de Brasil Mineração Ltda
AVB Mineração Ltda
Avanco Resources Mineração Ltda
Vale Dourado Mineração Ltda
MCT Mineração Ltda
ACG Mineração Ltda
Australia
Minotaur Resources Holdings Pty Ltd
Australia
OZ Exploration Pty Ltd
Australia
OZ Minerals Equity Pty Ltd
Australia
OZ Minerals Group Treasury Pty Ltd
Australia
OZ Minerals Holdings Limited
Australia
OZ Minerals Insurance Pte Ltd
Australia
OZ Minerals International (Holdings) Pty Ltd
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
OZ Minerals Investments Pty Ltd
OZ Minerals Jamaica Limited
OZ Minerals Prominent Hill Operations Pty Ltd
OZ Minerals Prominent Hill Pty Ltd
OZ Minerals Services Pty Ltd
OZ Minerals Zinifex Holdings Pty Ltd
ARL South America Exploration Ltd
Bermuda
OZ Minerals Carrapateena Pty Ltd
ARL Holdings Ltd
Avanco Luc S.a.r.l.
Avanco Lux I S.C.S
Carrapateena Pty Ltd
CTP Assets Pty Ltd
Bermuda
OZ Exploration Chile Limitada
Luxembourg
OZM Carrapateena Pty Ltd
Luxembourg
OZ Exploration (USA) LLC
Australia
SLM - Santa Lucia Mineracao Eireli
Australia
ZRUS Holdings Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
Australia
Australia
Jamaica
Australia
Australia
Australia
Australia
Australia
Chile
Australia
USA
Brazil
Australia
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 146
FINANCIAL REPORT
19. Deed of Cross Guarantee
The Company and all its Australian domiciled subsidiaries listed in Note 18 to the Consolidated
Financial Statements, except for, OZ Minerals International (Holdings) Pty Ltd and ZRUS Holdings Pty
Ltd, are party to a Deed of Cross Guarantee (‘Deed’).
The effect of the Deed is that the Company guarantees to each creditor payment in full of any debt
in the event of the winding up of any of the subsidiaries under certain provisions of the Corporations
Act 2001. If a winding up occurs under other provisions of the Act, the Company will only be liable in
the event that after six months any creditor has not been paid in full. The subsidiaries have also given
similar guarantees in the event that the Company is wound up.
During the year, the following entities were added into the Deed of Cross Guarantee: Avanco
Resources Pty Ltd, Avanco Holdings Pty Ltd, Estrela Metals Pty Ltd, AVB Minerals Pty Ltd,
AVB Copper Pty Ltd, AVB Carajas Holdings Pty Ltd and AVB Brazil Pty Ltd.
Set out below is the Consolidated Statement of Comprehensive Income and Consolidated Balance
Sheet of the entities within the Deed.
Consolidated statement of comprehensive income
of the entities within the Deed of Cross Guarantee
Revenue
Other income
Mining
Processing
Freight
Site administration
Royalties
Inventory movement
Corporate administration
Exploration and corporate development
Other expenses
Foreign exchange gain/(loss)
Profit before interest and income tax
Finance income
Finance expense
Profit before income tax
Income tax
Profit for the year
Other comprehensive gain/(loss)
Items that will not be reclassified subsequently to future Income Statements
Change in fair value of investments in equity securities, net of tax
Items that may be reclassified subsequently to future Income Statements
Cash flow hedges reserve change in fair value
Cash flow hedges reclassified to profit and loss
Other comprehensive loss for the year, net of tax
Total comprehensive income for the year
2019
$m
1,040.8
–
(218.2)
(135.0)
(73.9)
(39.2)
(57.5)
(136.2)
(47.2)
(55.0)
(4.5)
(1.2)
272.9
4.5
(8.4)
269.0
(65.2)
203.8
(7.6)
(52.0)
23.9
(35.7)
168.1
2018
$m
1,066.2
2.8
(266.9)
(140.2)
(68.6)
(35.4)
(52.5)
(86.0)
(29.0)
(60.1)
(6.1)
6.6
330.8
11.7
(4.2)
338.3
(95.2)
243.1
(6.7)
(19.4)
–
(26.1)
217.0
OZ MINERALS 147
Consolidated balance sheet of the entities
within the Deed of Cross Guarantee
Current assets
Cash and cash equivalents
Trade receivables
Tax receivable
Inventories
Prepayments
Other receivables
Total current assets
Non-current assets
Inventories
Exploration assets
Property, plant and equipment
Right-of-use assets
Investment in subsidiaries which are not party to the Deed
Other assets
Total non-current assets
Total assets
Current liabilities
Trade payables and accruals
Other payables
Current tax provision
Employee benefits
Provisions
Derivative financial instruments
Loans and borrowings
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Employee benefits
Provisions
Derivative financial instruments
Loans and borrowing
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Cash flow hedge reserve
Retained earnings
Treasury shares
Total equity
2019
$m
114.2
79.2
–
225.8
4.6
180.8
604.6
299.3
33.1
2,181.2
176.1
304.1
30.0
3,023.8
3,628.4
144.7
2.9
8.5
13.3
0.2
60.4
37.8
267.8
88.0
1.7
78.1
22.7
146.1
336.6
604.4
3,024.0
2,280.4
(49.4)
793.0
–
3,024.0
2018
$m
464.0
67.7
2.8
261.2
5.5
476.9
1,278.1
401.6
–
1,456.8
–
3.0
50.7
1,912.1
3,190.2
124.2
3.2
–
10.9
0.3
–
–
138.6
91.7
1.4
37.8
15.6
–
146.5
285.1
2,905.1
2,280.4
(23.0)
648.9
(1.2)
2,905.1
Comparative information for exploration assets and property, plant and equipment were reclassified as per Note 16.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 148
FINANCIAL REPORT
20. Key management personnel
Key management personnel remuneration
Key management personnel (KMP) are accountable for planning, directing and controlling the affairs
of the Company and its controlled entities.
KMP remuneration for the Consolidated Entity
Short-term employee benefits
Other long-term benefits
Post-employment benefits
Share-based payments
Total
2019
$
4,105,168
51,590
140,028
1,574,624
5,871,410
2018
$
4,555,776
35,993
149,524
1,191,713
5,933,006
Information regarding individual directors’ and executives’ compensation and some equity instrument disclosures as required by Corporations
Regulation 2M.3.03 is provided in the Remuneration Report.
Recognition and measurement of wages and salaries and short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be
settled within 12 months of the reporting date are recognised in the provision for employee benefits
in respect of employees’ services up to the reporting date and are measured at the amounts expected
to be paid, inclusive of on-costs, when the liabilities are settled.
Recognition and measurement of other long-term employee benefits
Long term employee benefits include annual leave liabilities which are expected to be settled in the
period greater than 12 months from balance date and long service leave liabilities. Other long-term
benefits are recognised in the provision for employee benefits and measured as the present value
of expected future payments to be made in respect of services provided by employees up to the
reporting date using the projected unit credit method. Consideration is given to the expected future
wage and salary levels, experience of employee departures and periods of service. Expected future
payments are discounted using market yields at the reporting date on high availability corporate
bonds with terms to maturity and currency that match, as closely as possible, the estimated future
cash outflows.
21. Related party transactions
A number of KMP, or their related parties, may hold positions in other entities that may result in them
having control or significant influence over the financial or operating policies of those entities. Where
the Consolidated Entity transacts with the KMP and their related parties, the terms and conditions
of these transactions are no more favourable than those available, or which might reasonably be
expected to be available, on similar transactions to non-KMP related entities on an arm’s length basis.
OZ MINERALS 149
22. Remuneration of auditors
Audit and review services
Auditors of the Group – KPMG
Audit and review of financial statements - Group
Audit and review of financial statements - controlled entities
Total fee for audit and review services
Assurance services
Auditors of the Group – KPMG
Assurance of NGERS data
Sustainability assurance
Total fee for audit, review and assurance services
Other services
Auditors of the Group – KPMG
Taxation advice and tax compliance services
Other services
Total fee for other services
Total fees
2019
$
2018
$
530,000
45,000
575,000
25,800
75,600
676,400
31,310
40,000
71,310
747,710
545,000
24,900
569,900
–
50,000
619,900
202,000
101,600
303,600
923,500
23. New accounting standards
Changes in accounting policies and mandatory standards adopted during the year
The accounting policies applied by the Consolidated Entity in these Consolidated Financial Statements
are consistent with those applied by the Consolidated Entity in its Annual Report for the year ended
31 December 2018 except for AASB 16 Leases as described below.
AASB 16 Leases
The Consolidated Entity has applied AASB 16 from 1 January 2019. It has adopted the modified
retrospective approach, under which the cumulative effect of the initial application is recognised in
retained earnings at 1 January 2019 without restatement of comparative information for 2018.
AASB 16 eliminates the distinction between operating and finance leases and brings all leases (other
than short term and low value leases) onto the balance sheet. As a lessee, the Consolidated Entity
recognises a right-of-use asset representing its right to use the underlying asset and a lease liability
representing its obligation to make lease payments.
An assessment is made, at inception or when contract terms are changed, to determine whether
the contract is or contains a lease. A contract is, or contains, a lease if the contract conveys a right
to control the use of an identified asset for a period of time in exchange for consideration.
The Consolidated Entity determines the consideration attributable to the lease or a lease
component within a contract on the basis of the standalone price of the assets for which a right
of use is conveyed.
The Consolidated Entity has elected to recognise lease payments associated with low value assets
and short term leases as an expense on a straight-line basis over the lease term.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 150
FINANCIAL REPORT
The carrying amounts of right-of-use assets are as below:
Balance at 1 January 2019 recognised on transition
Balance at 31 December 2019
Property
$m
Plant & equipment
$m
5.1
6.2
89.2
169.9
Total
$m
94.3
176.1
The Group presents lease liabilities in ‘Loans and borrowings’ in the consolidated balance sheet.
Transition
The Consolidated Entity has leases and embedded leases within service contracts which typically
include the option to renew the lease for an additional period after the end of the non-cancellable
period. Some leases also provide for additional payments based on changes in local price indices.
At transition, all lease liabilities were measured at the present value of the remaining lease payments,
discounted using the entity’s incremental borrowing rate at 1 January 2019. The right-of-use assets
are measured at their carrying amount as if AASB 16 had applied since the commencement date and
the incremental borrowing rate at 1 January 2019 was used.
The Group applied the following principles when applying AASB 16:
/ Applied an exemption not to recognise right-of-use assets and liabilities for leases with remaining
lease terms less than 12 months as at 1 January 2019.
/ Excluded initial direct costs from measuring the right-of-use asset at the date of initial application.
/ Used past experience when determining the lease term where the contract contained options to
extend or terminate the lease.
/ The Group applied a consistent incremental borrowing rate to a portfolio of leases with similar
characteristics.
/ The Group relied on the onerous contract assessment completed prior to transition as an
alternative to impairment testing of the ROU assets.
Impacts on financial statements
a. Impacts on transition
On transition to AASB 16, the Consolidated Entity recognised right-of-use assets, and lease liabilities,
reporting the net difference within retained earnings. The impact on transition is summarised below:
Right-of-use assets
Lease liabilities
Net deferred tax asset/(liability)
Retained earnings
Capital work in progress
1 January 2019
$m
94.3
(105.2)
2.5
6.1
2.4
When measuring lease liabilities on transition, the Group discounted lease payments using an
average rate of 3.5% at 1 January 2019.
The leases liability on transition to AASB 16 includes arrangements identified within mining
services supply contracts ($97.5 million) and other agreements ($7.7 million). No operating lease
commitments were disclosed at 31 December 2018.
b. Impacts for the period
As a result of initially applying AASB 16 in relation to the leases previously accounted for as operating
leases, the Group recognised $93.8 million of right-of-use assets and $101.0 million of lease liabilities
as at 31 December 2019.
OZ MINERALS 151
Amounts recognised in the Entity’s Consolidated financial statement for the year ended
31 December 2019.
Income statement
Depreciation and amortization
Lease interest (included in finance expense)
Expense relating to short-term leases
Expense relating to leases of low-value assets, excluding short-term
Cash flow statement
Lease liability payments (included in cashflows from net financing activities)
Lease interest paid (included in cashflows from operating activities)
Balance sheet
Right-of-use assets at carrying value
Addition to right-of-use assets
Lease liabilities (included in Loans and borrowings)
Current
Non-current liabilities
$m
23.3
1.5
0.5
0.2
43.6
1.5
176.1
124.1
(37.8)
(146.1)
Variable lease payment in relation to the right-of-use assets for the year was immaterial.
c. Short term lease commitments
At 31 December 2019, the Group has short term lease commitments of $0.3 million.
Issued Standards and Pronouncements not early adopted
At the date of authorisation of the Financial Statements, 2019-1 “Amendments to the Australian
Accounting standards - reference to the conceptual framework” standard has been issued and is
mandatory from 1 January 2020. This standard has not been adopted early by the Group and will
be first adopted for the year ending 31 December 2020. The standard is not expected to have a
material impact on application.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 152
FINANCIAL REPORT
Directors’ declaration
1. In the opinion of the directors of OZ Minerals Limited (the Company):
a) the Consolidated Financial Statements and Notes set out on pages 113 to 151 and the
remuneration disclosures that are contained in the Remuneration Report on pages 54 to 69,
are in accordance with the Corporations Act 2001, and:
i) give a true and fair view of the financial position of the Consolidated Entity as at
31 December 2019 and of its performance for the year ended on that date; and
ii) comply with Australian Accounting Standards and the Corporations Regulations 2001;
b) there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they fall due and payable.
2. The directors draw attention to page 117 of the Consolidated Financial Statements, which
includes a statement of compliance with international financial reporting standards.
3. At the date of this declaration, there are reasonable grounds to believe that the Company, and
the consolidated entities identified in Note 18, will be able to meet any liabilities to which they
are, or may become subject because of the Deed of Cross Guarantee between the Company
and those consolidated entities pursuant to ASIC Instrument 2016/785.
4. The directors have been given the declarations required by Section 295A of the Corporations
Act 2001 from the Chief Executive Officer and Chief Financial Officer for the financial year
ended 31 December 2019.
Signed in accordance with a resolution of the directors.
Rebecca McGrath
Chairman,
Adelaide
18 February 2020
Andrew Cole
Managing Director and
Chief Executive Officer
Adelaide
18 February 2020
OZ MINERALS
153
Independent Auditor’s Report
To the shareholders of OZ Minerals Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of OZ Minerals Limited (the Company).
In our opinion, the accompanying Financial Report of the Company is in accordance with the
Corporations Act 2001, including:
/ giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2019
and of its financial performance for the year ended on that date; and
/ complying with Australian Accounting Standards and the Corporations Regulations 2001.
The Financial Report comprises the:
/ Consolidated balance sheet as at 31 December 2019;
/ Consolidated statement of comprehensive income, Consolidated statement of changes
in equity, and Consolidated statement of cash flows for the year then ended;
/ Notes including a summary of significant accounting policies; and
/ Directors’ Declaration.
The Consolidated Entity consists of OZ Minerals Limited (the Company) and the entities
it controlled at the year-end or from time to time during the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities
for the audit of the Financial Report section of our report.
We are independent of the Consolidated Entity in accordance with the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110
Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that
are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical
responsibilities in accordance with the Code.
Key audit matters
The Key Audit Matters we identified are:
/ Acquisition accounting finalisation for the purchase of Avanco Resources Limited and
its controlled entities;
/ Valuation of Low Grade Gold Ore Stockpiles; and
/ Adoption of the new accounting standard AASB 16 Leases.
Key Audit Matters are those matters that, in our professional judgement, were of most significance
in our audit of the Financial Report of the current period.
These matters were addressed in the context of our audit of the Financial Report as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
KPMG, an Australian partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under Professional Standards Legislation.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 154
FINANCIAL REPORT
Acquisition accounting finalisation for the purchase of Avanco Resources Limited
and its controlled entities ($467.4 million)
The key audit matter
How the matter was addressed in our audit
During 2018, the Group purchased Avanco
Resources Limited and its controlled entities
(Avanco). The provisional acquisition accounting
for Avanco was finalised in 2019.
The finalisation of acquisition accounting for the
purchase of Avanco is a key audit matter due to:
/ The pervasive impact of the acquisition on
the Financial Report. Consequently it was a
significant part of our audit.
/ The level of judgement and audit effort we
applied in auditing the Group’s determination
of the fair value of acquired mineral rights
for each project and exploration assets,
based on available information. The Group
engaged an external valuation expert to
determine the fair value of the mineral rights
and exploration assets.
/ The complexity in accounting for deferred tax
consequences related to mineral rights arising
on acquisition.
Our procedures included:
/ We evaluated the acquisition accounting
against accounting standard requirements
and industry practice.
/ We challenged the significant judgements
made by the Group in determining the fair
value of acquired mineral rights and exploration
assets. This included comparing the value of
mineral rights recognised for each project
and exploration assets to the external expert’s
valuation report. We cross checked the value
of mineral rights and exploration assets in the
external report to published reports by brokers
and analysts.
/ We assessed the scope, competence and
objectivity of the Group’s external valuation
expert engaged to determine the fair values of
the mineral rights and exploration assets.
/ We evaluated the Group’s measurement
of the deferred tax liability arising from the
recognition of mineral rights against applicable
accounting standards and for consistency with
technical interpretative literature.
Valuation of Low Grade Gold Ore Stockpiles ($224.8 million)
Refer to Note 5 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Significant judgment is exercised by the Group
in their determination of the value of low
grade gold ore. The low grade gold ore will
be combined with copper ore to produce
concentrate. The valuation of low grade gold
ore stockpiles is a key audit matter due to:
/ The significant judgment required by us to
assess the key assumptions used in the Group’s
valuation model.
/ The size of low grade gold ore stockpiles as a
proportion of total assets (5.9%).
The Group’s valuation model estimates future
proceeds expected to be derived from low grade
gold ore contained in existing ore stockpiles, less
selling costs and further processing costs to
convert ore into concentrate.
Our procedures included:
/ We tested the Group’s key controls relevant to:
– The valuation of low grade gold ore
stockpiles, including board review and
approval of key assumptions used in the
Group’s model such as commodity prices
and foreign exchange rates; and
– The process for recording and monitoring
volumes and grades of stockpiled low grade
gold ore, such as the management review
and approval of grades.
/ We assessed the methodology applied by the
Group in determining the value of low grade
gold ore stockpiles against the requirements of
the accounting standards.
/ We compared the results of the Group’s
external quantity surveyors to the volume of
low grade gold ore stockpiles recorded in the
Group’s model at 31 December 2019.
OZ MINERALS 155
We focused on the significant forward-looking
assumptions the Group applied in their valuation
model, including:
/ Future metal production levels (ore blend rates),
which are dependent on the volume and grade
of existing low grade gold ore stockpiles.
/ Future processing costs of low grade gold ore,
and related selling costs.
/ Future commodity prices and foreign exchange
rates expected to prevail when the concentrate
containing gold from existing low grade gold
ore stockpiles is planned to be processed and
sold.
/ The timing of production, which depends on
the available capacity of the processing mill.
Assumptions are forward looking and / or not
based on observable data and are therefore
inherently judgmental to audit.
/ We compared grades of stockpiled low grade
gold ore recorded in the model to the grades
recorded in previous periods and to the
Group’s internal surveyor’s 31 December 2019
measurement of grades.
/ We assessed the scope, competence and
objectivity of the Group’s internal surveyors,
to grade the low grade gold ore stockpiles.
/ We challenged the Group’s key assumptions
used in the model to determine the value
of low grade gold ore stockpiles by:
– Comparing future processing costs of low
grade gold ore to historical actual processing
costs.
– Assessing future selling costs against current
costs, by comparing to a sample of existing
customer sales contracts.
– Assessing future commodity prices and
foreign exchange rates applied by the Group
against published analyst and broker data.
– Comparing forecast production of low grade
gold ore to be processed to publicly disclosed
mill capacity.
Adoption of the new accounting standard AASB 16 Leases (Right-of-use asset
($176.1 million), lease liability ($183.9 million) , depreciation and amortisation
and interest expense ($24.9 million) and adjustment to opening retained earnings
($6.1 million)
Refer to Note 23 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Adoption of the new accounting standard AASB
16 Leases (“AASB 16”) is inherently complex,
where specific lease features drive different
accounting outcomes, increasing the need for
interpretation and judgement.
This is a key audit matter for us due to the
following:
/ The Group was required to interpret these new
and complex accounting requirements and
implement new accounting policies for the first
time in the year. Applying a new standard to
existing business practices is more challenging
with little precedent.
/ The size of the impact of right-of-use
assets, lease liabilities and depreciation and
amortisation on the financial statements.
The most significant area of judgement we
focused on was leases embedded within supply
contracts. The Group enters into multiple service
and supply contracts with various features,
which increases the possibility of not identifying
embedded leases.
We involved our senior audit team members in
assessing this judgement.
Our procedures included:
/ We considered the appropriateness of the
Group’s new accounting policies against the
requirements of the accounting standard
and our understanding of the business and
industry practice.
/ We obtained an understanding of the Group’s
new processes used to calculate the lease
liability, right-of-use asset, depreciation and
amortisation, interest expense, and retained
earnings adjustment.
/ We assessed the completeness of the Group’s
leases, taking into consideration the selected
transition approach and practical expedients
applied on adoption by:
– Inspecting a sample of lease agreements
entered into by the Group and comparing
these to the listing of leases;
– Inspecting a sample of non-lease agreements
including service and supply contracts for the
existence of embedded leases;
– Inspecting relevant expense accounts for
routine payments during the year to identify
the existence of leases not included in the
Group’s listing of leases.
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT 156
FINANCIAL REPORT
/ We compared the Group’s inputs to the
AASB 16 lease calculation model, such as,
key dates, fixed and variable rent payments,
renewal options, incentives, and make good
obligations, for consistency to the relevant
terms of underlying source documents,
including signed lease agreements.
/ We considered the sensitivity of the Group’s
AASB 16 lease calculation model by varying
the incremental borrowing rate, within a
reasonably possible range. We did this to
identify the risk of bias or inconsistency in
application.
/ We assessed the integrity of the Group’s
AASB 16 lease calculation model, including
the accuracy of the underlying calculation
formulas. We recalculated the amount of lease
liability, right-of-use asset, depreciation and
amortisation, interest expense, and retained
earnings relevant to this financial year using
an independent lease calculation model and
compared the recalculated amounts against the
amounts recorded by the Group.
/ We assessed the disclosures in the financial
report against our understanding obtained
from our testing and against the requirements
of the accounting standard.
Other Information
Other Information is financial and non-financial information in OZ Minerals Limited’s annual reporting
which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are
responsible for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do
not express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report, defined sustainability information within the Sustainability Report and our
related assurance opinions.
In connection with our audit of the Financial Report, our responsibility is to read the Other
Information. In doing so, we consider whether the Other Information is materially inconsistent
with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be
materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other
Information, and based on the work we have performed on the Other Information that we
obtained prior to the date of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
/ preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001;
/ implementing necessary internal control to enable the preparation of a Financial Report that gives
a true and fair view and is free from material misstatement, whether due to fraud or error; and
/ assessing the Consolidated Entity and Company’s ability to continue as a going concern and
whether the use of the going concern basis of accounting is appropriate. This includes disclosing,
as applicable, matters related to going concern and using the going concern basis of accounting
unless they either intend to liquidate the Consolidated Entity and Company or to cease operations,
or have no realistic alternative but to do so.
OZ MINERALS 157
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
/ to obtain reasonable assurance about whether the Financial Report as a whole is free from
material misstatement, whether due to fraud or error; and
/ to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with Australian Auditing Standards will always detect a material misstatement when
it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at
the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_
responsibilities/ar1.pdf. This description forms part of our Auditor’s Report.
Report on the Remuneration Report
Opinion
In our opinion, the Remuneration Report of OZ Minerals Limited for the year ended
31 December 2019, complies with Section 300A of the Corporations Act 2001.
Directors’ responsibilities
The Directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with Section 300A of the Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included in pages 54 to 69 of the Directors’ report
for the year ended 31 December 2019.
Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
KPMG
Paul Cenko
Partner
Adelaide
18 February 2020
OZ MINERALS2019 ANNUAL & SUSTAINABILITY REPORT
158
SHAREHOLDER INFORMATION
Shareholder information
Capital
Share capital comprised 324,188,240 fully paid ordinary shares on 10 February 2020.
Shareholder details
At 10 February 2020, OZ Minerals had 41,269 shareholders. There were 733 shareholdings
with less than a marketable parcel of $500 worth of ordinary shares.
Top 20 investors at 10 February 2020
Name
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Citicorp Nominees Pty Limited
National Nominees Limited
BNP Paribas Nominees Pty Ltd
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