NEWS
RELEASE
Xstrata APPROVES
Koniambo NICKEL project
Zug, 17 October 2007
The Board of Xstrata
plc has approved the development of the Koniambo project, a major long-life,
low cost, open pit nickel mine, metallurgical plant and associated
infrastructure located in the North Province of New Caledonia.� Xstrata Nickel
owns a 49% stake in Koniambo Nickel SAS (“KNS”); the remaining 51%
share is held by New Caledonian joint venture partner Soci�t� Mini�re du Sud
Pacifique (“SMSP”).� Xstrata Nickel will lead the project
implementation and operations development on behalf of KNS and has the right to
appoint the President of KNS.� Xstrata’s Board approval follows the
recent approval by SMSP’s Board of the Koniambo project.
The project
development entails investment of $3.8 billion to be majority-funded by
Xstrata, in return for a proportionate share of the project’s cash flows in
the first 25 years of operation. The project will be funded through
Xstrata’s internal cash reserves and ongoing strong cash flows from the
Group’s operations.
Koniambo will be among
the world’s lowest cost producers of nickel with initial annual production
of 60,000 tonnes of nickel in ferronickel per annum and substantial further
high-return, brownfield expansion potential.� First ore is expected to be
processed in the first half of 2011, ramping up to steady state production in
2013.�
Koniambo benefits from
a world-class resource base, providing a mine life in excess of 25 years from
62.5 million tonnes of saprolite reserves grading 2.40% nickel at a 2.0%
cut-off grade.� This major resource also has the potential to extend mine life
to well in excess of 50 years of economic production. The resource base
currently comprises 142.1 million tonnes of measured and indicated saprolite
resources at 2.13% nickel at a 1.5% nickel cut-off grade, 140.7 million tonnes
of inferred saprolite resource, grading 2.16% nickel (1.5% cut-off) and 104
million tonnes of inferred limonite resources at 1.5% nickel (1.2% cut-off)..
Nickel will be
produced using Xstrata Nickel’s Nickel Smelting Technology which
integrates calcining, reduction and smelting unit operations from the mineral
processing industry with dust containment and counter-current gas flow
technologies from the cement industry.� The benefits associated with this
technology include higher metallurgical recoveries, improved dust containment
and lower operating costs than conventional ferronickel operations.
The decision to
approve the Koniambo project comes after a one-year renewal phase, during which
Xstrata Nickel and its partners undertook extensive work to optimize the scope,
design and financing of the project.� This renewal phase enabled the four major
risks associated with the project to be closely defined: execution risk;
project stability; socio-political risks; and environmental risks.�
Comprehensive mitigation strategies have been put in place to address each of
these risk areas, including the development of a robust execution plan, a
modular approach to engineering and construction, an innovative procurement
strategy, comprehensive stakeholder consultation and environmental planning..
Mick Davis, Xstrata
Chief Executive, said,”Koniambo represents the opportunity to develop an
outstanding nickel operation with cash costs in the lowest quartile and
exciting, low-cost growth potential from its vast resource base.� The project
is based on very strong valuation metrics and will meet Xstrata’s cost of
capital at a long-run nickel price of $4.60 per pound. Our decision to develop
the Koniambo resource marks an important milestone in the ongoing
transformation of our portfolio and in developing our exceptional growth
pipeline, which will deliver compound annual growth of 12% over the next five
years.”
Ian Pearce, Xstrata
Nickel Chief Executive, commented, “Koniambo is the most attractive
undeveloped nickel resource in the world and will be a cornerstone asset for
the future growth of our nickel business. The project will leverage Xstrata
Nickel’s strong project development and metallurgical skills, using
proven, low-cost nickel smelting technology and benefiting from the thorough
analysis undertaken during the project renewal phase.� The decision to proceed
with this project underlines our confidence in the outlook for nickel.
“Koniambo enjoys strong support from the New Caledonian and French
authorities, and from local communities. Together with our partners, we are
excited about the project’s potential to deliver value to stakeholders in
New Caledonia
and to Xstrata’s shareholders over very many years.”
Ends
INVESTMENT
MARKET PRESENTATION
An investment market presentation will be held today at
Deutsche Bank Auditorium, 1
Great Winchester St, London EC2N 2DB. Please arrive at 9am to
start promptly at 9.15am.
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The presentation
will be also be available via a live webcast and is available to view from www.xstrata.com . An archive of the webcast will be available
from Xstrata's website following the event.
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A telephone dial in
facility is available from the following numbers:
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TOLL FREE
Switzerland and UK: 00800 2467 8700
Australia: 1 800 005 903
USA: 1 866 291 4166
Canada: 1 866 416 25 55
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ALTERNATIVE NUMBERS
UK: +44 (0) 207 107 0611
Europe and ROW: +41 (0) 91 610 56
00
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An audio replay of the presentation will be available
from the following telephone numbers, approximately one hour after the
presentation ends.� All callers must enter ID number 329 followed by the # sign.
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Europe: +41 91 612 4330
UK: +44 207 108 6233
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North America: +1 (1) 866
4162558
Australia: 1 800 220 860
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Xstrata
contacts
Xstrata
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Xstrata
Nickel
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Claire Divver
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Peter Fuchs
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Telephone: +44 20 7968 2871
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Telephone: +1
416-775-1523
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Mobile: +44 7785 964340
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Mobile: +1 416-305-9273
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Email: cdivver@xstrata.com
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Email: pfuchs@xstratanickel.ca
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Investors
& analysts
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Hanr� Rossouw
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Telephone: +44 20
7968 2820
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Mobile: +44 7879 455885
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Email: hrossouw@xstrata.com
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Notes
to editors
Further
information about the Koniambo
project:
Location
Koniambo is located near the North
Province capital of Kon� in New Caledonia,
an overseas department of France
in the South Pacific. Situated 270 kilometres northwest of Noum�a, the Koniambo
Massif rises from a coastal plain to 930 metres above sea level.� Koniambo benefits from a location in close proximity to
the west coast of New Caledonia,
approximately 15 kilometres from the shore.
Infrastructure
Koniambo will benefit from proprietary infrastructure
including an ore preparation facility (3 mtpa), an overland conveyor, a 350 MW
power plant, a deep-sea port facility and a 1 million tonne per annum coal
handling facility. A desalination plant will also be constructed for process
and potable water supply.
About
Soci�t� Mini�re du Sud Pacifique
Soci�t� Mini�re du Sud
Pacifique (SMSP) is the largest exporter of nickel laterite ore from New Caledonia and also
ranks as the world’s largest ore supplier.� SMSP is majority owned (85%)
by Soci�t� de Financement et d’Investissement de la Province Nord,
(SOFINOR), which is the principal investment and development company of the
North Province of New Caledonia.
About
Xstrata Nickel
Xstrata Nickel,
headquartered in Toronto, Canada, is one of Xstrata Group’s global
commodity businesses, comprising five mines and processing facilities in Ontario and Quebec, Canada; a ferronickel mine and processing
facility in Bonao, Dominican
Republic; and a refinery in Kristiansand, Norway.�
Xstrata Nickel has a significant portfolio of growth projects, including
Koniambo in New Caledonia, Nickel Rim South in
Canada, Kabanga in Tanzania and Araguaia in Brazil.� Xstrata Nickel is the
world’s fourth largest nickel producer, with annual managed production of
more than 110,000 tonnes of refined nickel.
About
Xstrata plc
Xstrata is a major
global diversified mining group, listed on the London and Swiss stock exchanges.�
Headquartered in Zug, Switzerland, Xstrata maintains a
meaningful position in seven major international commodity markets: copper,
coking coal, thermal coal, ferrochrome, nickel, vanadium and zinc.� The company
also has recycling facilities, additional exposures to gold, lead, silver and
cobalt and a suite of global technologies, many of which are industry leaders.�
The Group’s operations and projects span 18 countries: Argentina, Australia,
Brazil, Canada, Chile,
Colombia, the Dominican Republic, Germany,
New Caledonia, Norway,
Papua New Guinea, Peru, Philippines,
South Africa, Spain, Tanzania,
the USA and the UK.