Xstrata to Proceed With Ravensworth North Coal Mine in Hunter Valley, New South Wales

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Researched by Industrial Info Resources (Sugar Land, Texas)--The diversified mining company Xstrata plc (LSE:XTA) (Zug, Switzerland) has decided to proceed with the development of the 8 million-ton-per-year, open-cut coal mine at Ravensworth North, in the Upper Hunter Valley of New South Wales, Australia.

The company intends to invest about $1.36 billion to develop the mine, with construction expected to begin early in 2011, subject to development consent from the New South Wales Department of Planning and environmental approval from the Australian federal government.

The mine will produce thermal coal and semi-soft coking coal for export purposes, with the first shipments from the mine, which is in the existing Cumnock Coal and Ravensworth complex, expected to be made in 2012. The expected life of the Ravensworth North mine is about 26 years.

Speaking before an investor briefing in London recently, Xstrata CEO Mick Davis said that the Ravensworth North project was just one of a series of 20 projects on the go, with a total combined investment of $14 billion, aimed at "taking advantage of strong commodity markets."

Xstrata began life as Südelektra AG in Switzerland in 1926, concentrating on infrastructure and electricity projects in Latin America before naming itself as Xstrata in 1999. Initially listed on the London Stock Exchange in 2002, the company grew swiftly through a series of acquisitions and takeovers.

However, the company now plans to focus on new mining operations rather than acquisitions, and over the next six years will invest up to $23 billion in new operations. For 2011 alone, the company plans a 50% increase in new mines investment up to a value of $6.8 billion, with the emphasis being on coal, copper and nickel projects.

Among the projects approved by Xstrata recently are the $4.2 billion Las Bambas copper mine in the Apurimac Region of Peru, and the $1.1 billion Ulan West underground thermal coal project in the central west of New South Wales. The Ulan West project is within the existing Ulan complex and is expected to produce about 6.7 million tons of export thermal coal each year from 2014.

The Peruvian project at Las Bambas will be a world-class copper mine with an annual production capacity of 400,000 tons per year of copper, with the additional benefits of significant gold, silver and molybdenum byproducts. The first ore is scheduled to be extracted in mid-2014, with full production capacity expected to be reached by the end of 2014. The expected mine life is estimated to be at least 18 years.

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