Xstrata Sees Growth By Acquisition And Projects

Xstrata sees growth by acquisition and projects

By Russell Blinch, Reuters

5th June 2007

MANILA - Xstrata is evaluating a half dozen mining projects around the world with the aim of doubling its copper production, although growth through acquisitions is still part of the company's strategy, according to the chief executive of Xstrata Copper.

Charlie Sartain said the company is aiming to boost copper production to two million tonnes a year from about 1 million tonnes now.

"If you are not producing two million tonnes a year you are not going to be a leader in the industry," Sartain told reporters at the Asia Pacific Mining Conference.

Xstrata has a number of new mining projects from Peru to the Philippines, which are in early stages of evaluation. Sartain, however, said it was unrealistic to believe all projects would reach production after initial development studies.

The London-listed Xstrata has made a flurry of deals, buying both properties and companies in its bid to expand its holdings. Xstrata made three big acquisitions in 2006 -- one third of Colombia's Cerrejon coal operation, Peru's Tintaya copper mine and, the biggest, Canada's Falconbridge.

But Sartain said the company was looking for to expand both through takeovers and through development of new deposits.

"There is no doubt that the philosophy of growth through acquisition has been spectacularly successful for Xstrata," Sartain said.

But he said: "In addition to continuing to look for acquisitions we will also grow through project development." He said one of the biggest projects on the tap is the company's Tampakan project on the island of Mindanao, in the Philippines.

The company exercised its option for a 62.5 stake last December in the project that is estimated to contain 11.6 million tonnes of copper and 14.6 million ounces of gold.

"We will be looking to pursue the evaluation as quickly as we can," he said without giving further details on when it will be decided to go with the project or not.