HomeInternationalXstrata to almost double capital spending in 2010

Xstrata to almost double capital spending in 2010

Xstrata’s Ernest Henry copper
and gold mine
in Australia
London, England — MININGREVIEW.COM — 04 December 2009 – Swiss-based, diversified mining group Xstrata Plc plans to boost capital spending next year by 89% to US$6.8 billion (R51 billion) in order to expand output, and is considering whether to close or sell any of its four profit-squeezed copper smelters.

The company, which aims to boost overall production by 50% by 2013, estimates capital expenditure of US$3.6 billion (R27 billion) this year, chief financial officer Trevor Reid told an investor seminar here. Most of the increased capex would go towards the nickel, coal and copper divisions for new and expanded mines, Reid added.

Xstrata also revealed that its board had approved spending US$542 million (R4 billion) to extend the life of its Ernest Henry copper and gold mine in Australia until at least 2024 by shifting to underground mining.

The copper unit had six advanced projects to deliver 60% production growth by 2015, said Xstrata copper division chief executive Charlie Sartain.

But he added that Xstrata “’ the world’s fourth-biggest producer of mined copper and third largest in refined copper “’ was performing a review of its four smelters with a combined capacity of about 800 000 tonnes.

“We’re analysing in some detail the value benefits of the different elements of those smelters, and each one of those assets needs to stand the scrutiny of whether or not it deserves to remain within the portfolio,” he said. “I think we’ll see progressively in the coming months where we need to take some decisions, and whether we have to do some further rationalisation,” he added.

Due to a rapid expansion of China’s smelting sector, overcapacity is due to grow to around 2 million tonnes over the next three to four years, Sartain said. “The current capacity plus what is being constructed at the moment is well in excess of what’s going to be delivered in coming years. We see a pretty tough environment for smelters for some years,” he predicted.