Zug, 1 February 2010

PRODUCTION REPORT FOR 12 MONTHS ENDED 31 DECEMBER 2009

Highlights:

¡ Record annual production of thermal coal, mined nickel, zinc in concentrate and lead metal

¡ Stronger second half volumes of chrome, platinum, copper, semi-soft and coking coal, with a significant increase in fourth quarter volumes across almost all commodities compared to third quarter

o  Xstrata Alloys progressively increased production from 20% of annual capacity at the start of 2009 to approximately 85% by year end in line with improving demand

o  Recommencement of Oaky No. 1 longwall in August after seven months of suspended operations

¡ Far-reaching restructuring and operational improvements delivered, in particular in nickel and zinc, to achieve material improvements in costs and competitiveness 

o  Record production levels at Mount Isa and McArthur River zinc operations following restructuring and expansion

¡ Successful completion of Goedgevonden Colliery, currently being commissioned to reach full capacity of 7 million tonnes per annum of thermal coal in 2011

¡ Low-cost Nickel Rim South mine produced more than 500,000 tonnes of ore in 2009 and will reach full capacity of 1.25 million tonnes in 2011, on time and on budget

¡ Construction commenced on the $1 billion development of Mangoola open cut thermal coal mine in Australia to produce up to 10.5 million tonnes ROM of export and domestic quality thermal coal annually, with an expected mine life of 18 years

¡ During 2009, three major organic growth projects gained Xstrata plc Board approval:

o  ATCOM East thermal coal project in South Africa will produce around 5.7 million tonnes per annum ROM and 3.1 million tonnes per annum of saleable thermal coal for a capital commitment of approximately $407 million

o  $293 million investment approved to extend the life of Xstrata Copper's Lomas Bayas mine in Chile by eight years to 2020 and sustain production capacity at an expanded rate of 75,000 tonnes per year of copper cathode

o  $542 million development to extend the life of Ernest Henry copper mine in Australia to at least 2024 through transformation to a major underground mine and magnetite extraction plant

¡ $1.3 billion (100%) expansion to Antamina Joint Venture (Xstrata share 33.75%) announced in January 2010 to increase processing capacity by 38% through concentrator expansion and mining fleet additions

¡ Increased mineral resource estimates in 2009 at Xstrata Coal's Wandoan project, Ravensworth West/Cumnock areas, Mangoola, Tahmoor and Ravensworth Underground (Australia) and Xstrata Copper's Southern Peru division, Lomas Bayas copper mine (Chile), Tampakan copper-gold project (Philippines), El Pachón (Argentina) and, in January 2010, Frieda River  (Papua New Guinea)

Ferrochrome production decreased by 30% in 2009 compared to the prior year, as a result of the Xstrata-Merafe Chrome Venture's curtailment of up to 80% of ferrochrome production capacity in late 2008 and early 2009 in response to the rapid decline in market conditions.  Production was progressively increased during the year from 20% of annual capacity in early January to approximately 85% by year end, in line with improving demand.  The strengthening of the Rand against the US dollar during 2009 continued to exert pressure on margins and, together with improving demand, enabled ferrochrome producers to achieve a 30% increase in pricing from $0.79 per pound in the first quarter to $1.03 per pound in the fourth quarter.

Ferrovanadium volumes fell by 37% in 2009 due to the suspension of production at Rhovan, Xstrata's integrated vanadium operation, during the third quarter for extended maintenance.  The operation returned to full production in mid October.

Overall, PGM volumes remained nearly unchanged year-on-year at 222,000 ounces. Production was adversely affected by above average rainfall in the early part of the year, which halted production at Eland for several days, and unforeseen geological anomalies which impacted the head grade at Mototolo.  These disruptions were offset by higher recoveries from an increased supply of UG2 ore to the mill and improved feed grade at Eland. During the last quarter of the year, Eland commenced development of an underground mine to replace its opencast tonnage and progressively increase current platinum production levels to up to 300,000 platinum ounces per annum from 2014.

Ferrochrome

		Year ended 31.12.09	Year ended 31.12.08
Attributable* saleable production (kt)		786	1,126
Indicative average published price (¢/lb) (Metal Bulletin)		85.0	175.8
*	Reflects Xstrata's 79.5% share of the Xstrata-Merafe Chrome Venture

Vanadium

		Year ended 31.12.09	Year ended 31.12.08
Consolidated** saleable ferrovanadium production (k kg)		2,284	3,622
Consolidated** saleable vanadium pentoxide (k lb)		11,492	16,604
Indicative average published price ferrovanadium (US$/kg) (Metal Bulletin)		25.0	61.2
Indicative average published price vanadium pentoxide (US$/lb) (Metal Bulletin)		6.0	13.5
**	Consolidated 100%

Platinum

		Year ended 31.12.09	Year ended 31.12.08
Consolidated† saleable production (oz)
Platinum		132,969	138,098
Palladium		67,435	65,774
Rhodium		21,182	18,644
Average prices ($/oz)
Average (London Platinum and Palladium Market) Platinum price ($/oz)		1,205	1,578
Average (London Platinum and Palladium Market) Palladium price ($/oz)		264	353
Average (Johnson Matthey) Rhodium price ($/oz)		1,559	6,558
†	Consolidated 100% of Eland and 50% of Mototolo

 

 

 

Total consolidated coal production increased by 11% to 95.2 million tonnes in 2009, with thermal and semi-soft coal up 13% and 17% respectively compared to 2008.

Total thermal coal volumes rose to 82.6 million tonnes, as a result of the inclusion of 10.5 million tonnes from the Colombian Prodeco operations, acquired in March, combined with increased volumes at the highly productive Newlands Northern Underground mine in Queensland as a result of improved geological conditions.

The construction of the Goedgevonden open pit thermal coal mine in South Africa was successfully completed during the year and is ramping up to full production of 7 million tonnes per annum in 2011.  Despite additional tonnes from Goedgevonden, production from the South African operations fell by 8% compared to the prior year, due to the planned shutdown of Impunzi Underground and reduced demand for unwashed coal in the domestic and export Atlantic market.  Lower demand for export thermal coal in the Atlantic coal market also constrained Colombian production.

Semi-soft coking coal production increased by 17% year-on-year due to the New South Wales operations switching from thermal production to higher-priced semi-soft production to maximise margins.

Production of Australian coking coal decreased by 7% for the full year, as the suspension of longwall operations at Oaky No 1 for the first half of 2009 in response to weak market conditions and industrial action at Tahmoor were only partly offset by increased productivity at Oaky North.

		Year ended 31.12.09	Year ended 31.12.08
Total consolidated production (million tonnes)		95.2	85.5
Total thermal coal		82.6	73.3
Australian thermal		41.1	40.2
South African thermal*		20.8	22.7
Americas thermal**		20.7	10.4
Total coking coal (Australia)		6.4	6.9
Total semi-soft coking coal (Australia)		6.2	5.3
Average received export FOB coal price ($/t)
Australian thermal		80.3	95.6
South African thermal		68.1	78.4
Americas thermal		74.8	80.9
Australian coking		145.0	232.5
Australian semi-soft coking		122.5	157.5
* **	For production reporting DTJV is included for the full year ended 31 December 2009.  For financial reporting DTJV was excluded from Xstrata Coal's ex-mine results from 3 March 2008 to 1 July 2009 due to the DTJV re-structuring Prodeco operations included from acquisition effective date of 1 January 2009

 

 

 

Total mined copper production decreased by 5% to 906,898 tonnes in 2009 compared to the previous year, mainly due to a 75,000 tonne reduction in copper production at Ernest Henry and lower output at Alumbrera and Antamina.  Output at Ernest Henry was significantly impacted by the planned higher waste stripping rate required to access the next ore zone, flooding during the record wet season earlier in the year that required extensive pit dewatering and lower ore grades in line with the mine plan.  Planned lower grades at Alumbrera also reduced output, as the grade profile of the operation naturally declines together with lower copper grades at Antamina as the mine plan moved from mainly copper-only ore zones to a zinc-copper ore zone in 2009.

Record performances at Xstrata Copper's Chilean operations and the Mount Isa mining operations in Australia partially offset reduced volumes.  Total copper production increased at Collahuasi by 15%, as a result of higher milled volumes, grades and metallurgical recoveries.  These improvements more than compensated for the failure of the main feed conveyor to the concentrator plant in July that resulted in reduced throughput for 44 days.  Copper cathode production at Lomas Bayas improved by 24% following the completion of an expansion project in the last quarter of 2008 that more than offset the impacts of an eight day strike in May. Increased mill throughput and higher grades resulted in a 7% increase to copper in concentrate production at Mount Isa.

Gold production decreased by 27% to 502,967 ounces in 2009 compared to the previous year, mainly due to lower grades and recoveries at Alumbrera and significantly lower gold production at Ernest Henry.

Total combined custom and mined copper cathode production declined by 10% as a result of  the temporary suspension of operations at the Kidd metallurgical plant and slow downs at the other Canadian metallurgical operations resulting from excessive acid inventories following a collapse in demand for sulphuric acid.  This was partially offset by a 16% increase to anode production at Altonorte in Chile, following an expansion completed at the end of 2008 and a 4% increase to achieve record cathode production at the Townsville refinery in Australia due to the increased supply of anode from Altonorte. 

In December 2009, as part of a rationalisation of its Canadian operations, Xstrata Copper announced that the Kidd metallurgical operations would permanently cease operations in June 2010 as a result of fundamental changes in the global smelting industry that have made the Kidd metallurgical plants economically unviable.

	Year ended 31.12.09	Year ended 31.12.08
Argentina - Alumbrera*
Material mined (t)	88,199,734	99,397,413
Ore mined (t)	29,303,980	28,070,827
Copper head grade (%)	0.46	0.50
Gold head grade (g/t)	0.49	0.55
Ore treated (t)	37,533,923	37,502,049
Concentrate produced (t)	550,943	614,810
Copper in concentrate (t)	143,084	156,893
Gold in concentrate (oz)	366,368	443,919
Gold in doré (oz)	55,628	60,484
Total gold (oz)	421,996	504,403
Australia - Ernest Henry
Material mined (t)	24,784,595	31,278,138
Ore mined (t)	2,673,307	12,164,437
Copper head grade (%)	0.75	1.07
Gold head grade (g/t)	0.38	0.53
Ore treated (t)	8,020,446	11,406,365
Concentrate produced (t)	127,708	387,803
Copper in concentrate (t)	35,562	110,890
Gold in concentrate (oz)	45,227	146,116
Australia - Mount Isa
Ore mined (t)	5,980,268	5,913,003
Copper head grade (%)	2.95	2.84
Ore treated (t)	6,028,600	5,881,244
Concentrate produced from ore (t)	627,117	583,937
Copper in concentrate from ore (t)	161,947	151,577
Anode copper (t)	214,350	236,210
Copper  cathode(t)	277,320	266,517
Canada - Kidd Creek Mine and Metallurgical Sites
Ore mined (t)	2,273,366	2,565,112
Copper head grade (%)	2.02	1.88
Ore treated (t)	2,386,920	2,439,513
Concentrate produced (t)	160,714	156,796
Copper in concentrate (t)	43,620	42,723
Copper cathode (t)	54,060	87,327
Canada - Horne
Concentrate treated (t)	307,193	767,207
Anode copper (t)	163,700	171,483
Canada - CCR Refinery
Copper cathode (t)	278,196	344,809
Chile - Collahuasi**
Material mined (t)	74,870,120	73,256,998
Ore mined (t)	31,327,040	25,387,918
Copper head grade (%)	1.21	1.18
Ore milled (t)	19,953,234	18,751,574
Concentrate produced (t)	808,689	692,587
Copper in concentrate (t)	216,800	182,585
Copper cathode (t)	18,977	21,732

 

		Year ended 31.12.09	Year ended 31.12.08
Chile - Lomas Bayas
Material mined (t)		54,374,956	52,345,353
ROM leach (t)		37,644,524	31,109,378
ROM copper grade (%)		0.28	0.23
Heap leach (t)		13,353,301	13,670,161
Heap leach copper grade (%)		0.41	0.41
Copper cathode (t)		73,043	59,134
Chile - Altonorte
Concentrate treated (t)		915,049	822,836
Anode copper (t)		268,014	231,902
Peru - Antamina Copper***
Material mined (t)		38,305,341	39,341,572
Ore mined (t)		12,816,021	12,853,862
Copper head grade (%)		1.16	1.25
Ore treated (t)		11,331,118	10,272,815
Copper concentrate produced (t)		369,045	409,659
Copper in concentrate (t)		106,671	115,997
Peru - Tintaya
Material mined (t)		82,314,762	78,539,821
Ore mined (t)		8,914,259	8,886,330
Ore milled (t)		6,991,682	7,109,747
Copper grade in ore milled (%)		1.39	1.38
Gold grade in ore milled (g/t)		0.25	0.27
Concentrate produced (t)		264,971	272,850
Copper in concentrate (t)		81,739	83,632
Gold in concentrate (oz)		35,745	36,693
Copper cathode (t)		25,454	27,263
Total mined copper production (t) (contained metal)		906,898	952,426
Total mined gold production (oz) (contained metal)		502,967	687,212
Total copper cathode (from own and third party material) (t)		727,050	806,782
Average LME copper price (US$/t)		5,150	6,956
Average LBM gold price (US$/oz)		973	872
*	100% consolidated figures
**	Xstrata Copper's pro-rata share of Collahuasi (44%)
***	Xstrata Copper's pro-rata share of Antamina (33.75%)

 

 

 

Total mined nickel production increased to 57,052 tonnes, 5% higher than in 2008, as increased head grades and volumes from Raglan, significantly higher volumes from Xstrata Nickel Australasia (XNA) and initial feed from the Nickel Rim South operation more than offset the impact of the restructuring of the Sudbury operations.  Xstrata Nickel's restructuring, which repositioned the business lower on the cost curve, included the closure of high-cost, end-of-life mines in Sudbury, the suspension of Falcondo, significant reductions in operational and administrative costs and the deferral of the Fraser Morgan and Sinclair underground growth projects.  The Montcalm mine was suspended at the end of March and indefinitely suspended from June, following unplanned ground movement.  Strathcona's milling capacity was reduced by 50% to better align with the processing of inventories from Sudbury mines and decreased local feed volumes.  Total mined ore processed at Strathcona declined by 45% in 2009 compared to last year.

Raglan increased its nickel in concentrate production by 13%, as a result of an 11% increase in nickel head grade and a 12% increase in ore mined compared to 2008.  Nickel in concentrate production at Xstrata Nickel's Australian operations increased by 119% to a record 16,678 tonnes, due to a significant increase in mining at the Prospero deposit, a 3% increase in head grade overall at Cosmos and the commissioning of the Sinclair open pit mine.

Nickel production at the Nikkelverk refinery remained at a similar level to 2008, as increased volumes at Raglan and XNA offset the loss of direct feed from Sudbury and Montcalm and reduced third party feed volumes.  Nikkelverk produced a record 46,605 tonnes of nickel in the second half of 2009, demonstrating its ability to operate at an increased annualised rate of 92,000 tonnes, following minimal capital cost debottlenecking initiatives.

The Falcondo ferronickel operation in the Dominican Republic remains on care and maintenance.

	Year ended 31.12.09	Year ended 31.12.08
North America - Sudbury Operations
Ore mined (t)	715,629	1,641,687
Nickel head grade (%)	1.31	0.98
Copper head grade (%)	2.08	1.12
Ore treated (t)	1,099,817	1,914,763
Nickel in concentrate (t)*	11,409	16,810
Nickel in matte (t)*	65,889	64,906
Copper in concentrate (t)*	21,361	19,138
Copper in matte (t)*	18,560	17,811
Cobalt in concentrate (t)*	277	538
Cobalt in matte (t)*	2,476	2,648
North America - Montcalm
Ore mined (t)	208,681	953,871
Nickel head grade (%)	1.02	1.20
Copper head grade (%)	0.61	0.65
Ore treated (t)	226,399	927,158
Nickel in concentrate (t)	1,961	8,905
Copper in concentrate (t)	1,179	5,091
Cobalt in concentrate (t)	73	338
North America - Raglan
Ore mined (t)	1,465,788	1,314,191
Nickel head grade (%)	2.56	2.30
Copper head grade (%)	0.68	0.62
Ore treated (t)	1,310,657	1,300,133
Nickel in concentrate (t)	29,262	25,873
Copper in concentrate (t)	7,188	6,402
Cobalt in concentrate (t)	586	512

 

		Year ended 31.12.09	Year ended 31.12.08
Australia - XNA**
Ore mined (t)		567,469	286,254
Nickel head grade (%)		3.51	3.53
Ore treated (t)		648,481	262,857
Nickel in concentrate (t)		16,678	7,610
Copper in concentrate (t)		928	303
Cobalt in concentrate (t)		459	120
Dominican Republic - Falcondo***
Ore mined (t)		-	2,745,612
Nickel head grade (%)		-	1.14
Ore treated (t)		-	1,707,958
Nickel in ferronickel (t)		-	18,782
Europe - Nikkelverk
Nickel metal (t)		88,577	88,741
Copper metal (t)		33,881	37,027
Cobalt metal (t)		3,510	3,719
Total  mined nickel production (t) (contained metal)		57,052	54,523
Total  mined copper production (t) (contained metal)		25,428	27,703
Total  mined cobalt production (t) (contained metal)		1,326	1,341
Total  refined nickel production (t) (payable metal)		88,577	88,741
Total  mined ferronickel production (t) (contained metal)		-	18,782
Average LME nickel cash price ($/t)		14,712	21,104
Average LME copper cash price ($/t)		5,150	6,956
Average Metal Bulletin cobalt low grade price ($/lb)		15.17	35.16
* ** ***	Including production from ore and other feed purchased from third party mines and smelters Consolidated from 1 February 2008 100% consolidated figures

 

 

 

Zinc in concentrate production increased by 20% to 1,032,755 tonnes compared to 2008, as a result of expansions and restructuring at the Australian operations, the first full year of production at Perseverance mine, increased volumes at Brunswick mine and higher zinc production at the Antamina copper-zinc operation.  The restructuring of the Mount Isa operations resulted in a 15% increase in zinc in concentrate, despite the operation being impacted by severe weather during the first quarter of the year.  Production at McArthur River Mine rose by 17% following its expansion to an open pit operation which was completed in the first half, offsetting the temporary suspension of the operation in the first two months of the year.

Total refined zinc metal production of 825,208 tonnes was a 4% increase on 2008, despite smelter cutbacks in Canada in response to the weak acid market and lower production at Nordenham to optimise power usage.  San Juan de Nieva smelter reached full capacity, producing 500,776 tonnes of zinc metal, an 11% increase on 2008.

Lead in concentrate production decreased by 9% in 2009 as a result of lower ore grades at the Australian operations.  Refined lead metal production increased by 10% in 2009 as higher volumes of crude lead were processed at the Northfleet refinery.

On 1 February 2010, Xstrata Zinc and its joint venture partner Minco Plc announced a $10 million (€7 million) exploration programme for 2010 at the Pallas Green zinc-lead project in Ireland.

	Year ended 31.12.09	Year ended 31.12.08
Australia - Mount Isa
Ore mined (t)	7,321,971	6,357,981
Zinc head grade (%)	6.0	6.4
Lead head grade (%)	2.9	3.4
Silver head grade (g/t)	59.1	69.3
Ore treated (t)	7,424,153	6,099,914
Zinc in concentrate (t)	324,164	283,063
Lead in concentrate (t)	126,227	140,023
Lead in lead/silver bullion (t)	146,099	166,866
Lead in purchased concentrate smelted(t)	20,166	40,657
Silver in crude lead (koz)	7,792	10,197
Silver in purchased concentrate smelted (koz)	2,999	5,076
Australia - McArthur River
Ore mined (t)	2,092,179	1,977,476
Zinc head grade (%)	10.3	9.6
Lead head grade (%)	4.5	4.5
Ore treated (t)	2,170,895	2,111,993
Zinc in concentrate (t)	166,467	142,460
Lead in concentrate (t)	37,093	36,560
Silver in concentrate (koz)	1,465	1,282
Australia - Lennard Shelf*
Zinc in concentrate (t)	-	15,385
Lead in lead concentrate (t)	-	4,507
Europe - San Juan de Nieva
Zinc metal (t)	500,776	450,381
Europe - Nordenham
Zinc metal (t)	146,634	151,096

 

 

		Year ended 31.12.09	Year ended 31.12.08
Europe - Northfleet
Mount Isa sourced lead (t)		157,865	138,959
Other lead (t)		-	102
Total lead (t)		157,865	139,062
Mount Isa refined silver (koz)		8,758	7,907
Total silver (koz)		8,758	7,907
North America - Brunswick mine
Ore mined (t)		3,322,565	3,311,624
Zinc head grade (%)		8.6	8.4
Lead head grade (%)		3.3	3.3
Silver head grade (g/t)		101	105.0
Ore treated (t)		3,321,219	3,300,726
Zinc in zinc concentrate (t)		232,709	222,033
Zinc in bulk concentrate (t)		19,707	20,445
Lead in bulk concentrate (t)		13,824	14,685
Lead in lead concentrate (t)		52,638	55,721
Lead in lead concentrate to smelter (t)		51,977	55,719
Lead in other feeds to smelter (t)		20,118	25,612
Total refined lead (t)		83,620	81,329
Silver in bulk concentrate (koz)		959	1,050
Silver in lead concentrate to smelter (koz)		2,480	2,838
Silver in other feeds to smelter (koz)		6,026	2,010
Total silver in doré (koz)		9,075	4,897
North America - CEZ refinery **
Zinc metal (t)		65,105	72,895
North America - Perseverance
Ore mined (t)		1,010,598	511,341
Zinc head grade (%)		14.4	13.5
Ore treated (t)		1,023,699	492,263
Zinc in concentrate (t)		135,708	60,265
Copper in concentrate (t)		8,607	3,793
North America-Kidd Creek
Zinc metal (t)		112,693	121,193
Peru - Antamina Zinc***
Ore mined total (t)		12,816,021	12,853,862
Zinc head grade (%)		3.0	1.5
Ore treated total (t)		11,331,118	10,272,815
Zinc in concentrate (t)		154,000	117,381
Total zinc in concentrate production (t)		1,032,755	861,033
Total zinc metal production (t)		825,208	795,565
Total lead in concentrate production (t)		229,782	251,496
Total lead metal production (t)		241,485	220,391
Average LME zinc price ($/t)		1,659	1,870
Average LME lead price ($/t)		1,726	2,084
* ** ***	Xstrata Zinc's pro-rata share of Lennard Shelf production (50%), closure announced on 14 July 2008 Xstrata Zinc's pro-rata share of CEZ production (25%) Xstrata Zinc's pro-rata share of Antamina production (33.75%)

Xstrata contacts:

			Investors & analysts
Claire Divver			Hanré Rossouw
Telephone	+44 20 7968 2871		Telephone	+44 20 7968 2820
Mobile	+44 7785 964 340		Mobile	+44 7879 455 885
Email	cdivver@xstrata.com		Email	hrossouw@xstrata.com
Pamela Bell
Telephone	+44 20 7968 2822
Mobile	+44 7799 626715
Email	pbell@xstrata.com

Notes to editors

About Xstrata plc

Xstrata is a global diversified mining group, listed on the London and Swiss Stock Exchanges, with its headquarters in Zug, Switzerland.  Xstrata's businesses maintain a meaningful position in seven major international commodity markets: copper, coking coal, thermal coal, ferrochrome, nickel, vanadium and zinc, with a growing platinum group metals business, additional exposures to gold, cobalt, lead and silver, recycling facilities and a suite of global technology products, many of which are industry leaders.  The Group's operations and projects span 19 countries.