HomeBase MetalsXstrata to spend US$710 million on new smelter

Xstrata to spend US$710 million on new smelter

Existing Xstrata
smelter “’ new one will
cost R4.9 billion
Zug, Switzerland — MININGREVIEW.COM — 20 October 2010 – Major global diversified mining group Xstrata “’ based in Switzerland and listed on the London and Swiss stock exchanges “’ is to spend US$710 million (R4.9 billion) to boost capacity of ferrochrome production and cut costs with a more energy-efficient smelter in South Africa.

One of the world’s biggest producers of ferrochrome, the company revealed in a statement here that it had approved the second phase of its Lion ferrochrome complex.

“The use of our energy-efficient Premus technology for the expansion project will expand Xstrata’s cost leadership in a global environment of escalating energy costs,” said Xstrata Alloys chief executive Peet Nienaber.

In terms of the expansion project, a new smelter will be built with a capacity of 360 000tpa, boosting the group’s overall ferrochrome capacity to over 2.3Mt. The project is due to reduce overall costs of ferrochrome production by around 6%, Xstrata said.

The expansion will create over 1 000 permanent jobs and a further 1 800 jobs will be generated during the construction phase. Around 80% of the total expenditure on project goods and services will be sourced locally.

Xstrata’s pooling and sharing venture (PSV) partner, JSE-listed Merafe Resources, holds a 20.5% interest in the venture, and has an option to participate in the expansion.

“Merafe will be assessing Lion II and an announcement regarding the company’s participation in the project will be made by the end of the year,” the company said in a separate statement.

Xstrata CEO Mick Davis commented: “This expansion further enhances Xstrata’s leading position in the ferrochrome market, and will allow the Group to benefit from anticipated growth in global demand for stainless steel.”