Xstrata shuts down Canadian plants

I-Net Bridge | Tue, 08 Dec 2009 11:19
[miningmx.com] --GLOBAL diversified miner Xstrata said Xstrata Copper Canada would permanently cease operation of its copper and zinc metallurgical plants at the Kidd Metallurgical site in Timmins from May 2010.

The closure is part of a plan to restructure the group's Canadian metallurgical operations.

Xstrata said the mine and concentrator would remain in operation.

The shutdown is expected to result in exceptional closure-related costs and asset impairment charges of approximately $375m, to be reflected in Xstrata's 2009 financial statements.

Xstrata said the decision to shut down the copper and zinc metallurgical plants followed an investigation of various options to improve the financial performance of these assets in the face of global smelting overcapacity, record low treatment and refining charges, increasing operating and capital costs to run and maintain these facilities and lower demand and sales prices for sulphuric acid.

These issues have been exacerbated at Kidd by the appreciation of the Canadian dollar against the US dollar.

Following the shutdown of these operations, the remaining Kidd assets will be integrated with the smelting and refining assets of Xstrata's Horne smelter and CCR refinery to improve the overall financial competitiveness of the Canadian division and balance concentrate supply with smelting and refining capacity in the region.

Xstrata said the ongoing challenging market conditions for custom smelting operations would also result in an exceptional impairment charge of $170m in respect of Xstrata Copper's Altonorte smelter in northern Chile.

In addition, Xstrata Nickel has undertaken a full assessment of the fair value of its assets following the substantial restructuring of its business undertaken during 2009 and as part of the annual business planning process that commenced in July.

As a result, a total estimated impairment charge of approximately $1.9bn after tax will be incurred in Xstrata's 2009 financial statements in respect of its Australian, Norwegian and Canadian nickel assets.

Xstrata Nickel's restructuring included the closure of high-cost, end-of-life mines in Sudbury, the suspension of the Falcondo and Montcalm operations, significant reductions in operational and corporate costs and the deferral of the Fraser Morgan and Sinclair Underground growth projects.

The impact of these restructurings on exploration potential, life of mine plans and expectations of post-restructuring capital and operating costs have continued to evolve over the course of the year.