HomeBase MetalsXstrata suspends R5 billion investment in SA

Xstrata suspends R5 billion investment in SA

Xstrata CEO
Mick Davis
Johannesburg, South Africa — MININGREVIEW.COM — 08 April 2010 – Xstrata plc “’ one of the world’s major resources companies “’ has suspended a R5 billion investment in ferrochrome in South Africa because of power problems there.

Making this announcement in a speech delivered here, Xstrata CEO Mick Davis pointed out a string of bottlenecks that he said had caused the country to miss the last commodity price boom.

One of the key deterrents to investment in South Africa has been the energy crisis, which culminated in the mines being shut for a week in January 2008 when there just wasn’t enough power to go round. There is an accelerated construction programme that will start delivering power in 2013, but miningmx.com reports that there are major price hikes in the offing to pay for it, as well as a lack of certainty about the time line.

“A shortage of energy generation capacity has already stalled further investment in mining and beneficiation capacity, losing with it the potential for thousands of jobs, as well as the associated revenue and foreign exchange this production would earn for the country,” said Davis. “Xstrata has suspended a R5 billion ferrochrome expansion,” he added.

Davis said changes that could be wrought on the mining sector stemming from talks between the government, labour and mining companies were a positive development. The first phase in those changes had come from a two-day summit last week between the three parties to identify issues curtailing the sector’s growth and transformation.

“It is, however, critical that we quickly transform our intentions into detailed, actionable plans to deliver the improvements necessary to position the industry for future growth,” he emphasised. “Xstrata is committed to playing our part in this process, along with our many other stakeholders,” Davis stated.

The process “’ which mines minister Susan Shabangu wants completed by the end of June “’ entails changes to the Mining Charter and, early next year, changes to the Mineral and Petroleum Resources Development Act, as well as other legislation to iron out items preventing growth and transformation.