Xstrata has provided updates on activity at two of its mining operations in Australia. At Xstrata Zinc’s McArthur River zinc mine in the Northern Territory, a $360-million investment has received corporate approval to more than double the mine’s capacity from 2.5 million to 5.5 million mt/y of ore by 2014. The project remains subject to final Australian government approval. At Xstrata Copper’s $124-million Mount Margaret copper mining project in northwest Queensland, open-pit mining started on schedule and on budget in late July 2012.

                McArthur River: The McArthur River Phase 3 development project will increase annual production to 380,000 mt of zinc in concentrates and 93,000 mt of lead in concentrates. Advanced processing technology will enable the processing plant for the first time to produce a separate zinc concentrate acceptable to all smelters from its bulk zinc-lead concentrate. The project will reduce average unit costs by more than 20%, and reserves will increase by around 70 million mt to 115 million mt, making McArthur River the largest zinc resource in the world. Mine life will be extended to 2038.

                The project will expand the current pit within the existing bund from a footprint of 145 ha to 210 ha and deepen the pit from 210 m to 420 m. It will increase the capacity of the existing tailings storage facility and line the existing Cell 3 and proposed Cell 4 of the facility with a high-density polyethylene barrier to prevent potential seepage. It will generate approximately 530 million mt of additional waste rock to be accommodated in one existing and two new overburden emplacement facilities. And, it will extend the life of the McArthur River Mine Community Benefits Trust, which since 2007 has invested in grant programs valued at more than A$7 million to support the socio-economic development of the region.

                A 20-year electricity supply agreement has been secured with Energy Developments Ltd. to develop a new gas-fired power station at McArthur River generating 40 MW/y to service the expanded operations from 2014.

                Xstrata plc executive director and Xstrata Zinc Chief Executive Santiago Zaldumbide said, “When we acquired the McArthur River mine in 2003 as part of the Mount Isa Mines acquisition, Xstrata inherited an uneconomic asset with an estimated mine life of less than five years, rising costs, and an underground operation that could only exploit two of the eight available orebodies. Following our conversion of the operation into a 2.5-million-mt/y open-cut mine with a 15-year life in 2010 to open up access to McArthur River’s vast resource, the Phase 3 project will enable us to unlock fully its potential.

                “The next phase of McArthur River’s development will complete our transformation of a failing and unprofitable operation nine years ago into a world-class, low-cost, large-scale, and long-life open-cut mine. We expect new production to flow into the market at a time of projected deficit in the global zinc concentrate market, and McArthur River will be well positioned to meet demands from both our own smelters and external customers.”

                Mount Margaret: Xstrata Copper acquired the E1 and Monakoff copper tenements that are the basis for Mount Margaret development from Exco Resources in June 2011 for A$175 million. The tenements are located 8 km east and 21 km south, respectively, of the company’s Ernest Henry operations and are being developed through a series of small open-pit mines. Ore is being trucked to Ernest Henry and processed through the existing concentrator.

                Ernest Henry Mining’s General Manager Myles Johnston said, “Mount Margaret will add around 30,000 mt/y of copper production to Ernest Henry over a five-year period, strengthening the economics of the complex and taking immediate advantage of the available installed capacity of the concentrator and associated infrastructure. In total, the project will add an additional 20 million mt of ore to our existing ore production profile throughout its five-year life, producing around 140,000 mt of copper, 83,000 oz of gold, and 560,000 mt of magnetite in concentrate over that time. We also plan further exploration at Mount Margaret to identify any additional ore resources for future development.”

                Ernest Henry is a copper, gold and magnetite mining and processing operation located 38 km northeast of Cloncurry, Queensland. In December 2009, Xstrata approved a $542-million investment to extend the mine’s operating life to at least 2024 through transition from open-pit mining operations to a major underground mine, together with the construction of an associated magnetite extraction plant.

                Initial underground operations began from a decline in December 2011 at rate of 3 million mt/y, marking the site’s transition to underground mining and magnetite processing. Following the commissioning of an underground shaft in 2013, production will ramp up to 6 million mt/y, producing 50,000 mt/y of copper and 70,000 oz/y of gold in concentrate.

                Magnetite processing operations started up in the first quarter of 2011, producing about 1.2 million mt/y of magnetite for export to Asia.