[miningmx.com] — XSTRATA plans to increase spending on new mines by about 50% next year to $6.8bn as the mining group keeps its main focus on organic growth rather than acquisitions.
Total spending on new mining operations is due to reach $23bn over the next six years, the London-listed group said on Tuesday ahead of an investor presentation.
Xstrata in its early years grew quickly through a series of takeovers, but last year switched its focus to expanding existing operations and building new projects.
“Together with opportunistic M&A where we can extract value, our focus on organic growth means that Xstrata’s path to value is clear and is in the hands of our management teams,” CEO Mick Davis said.
The Anglo-Swiss group said it was on track to meet its targets set last year to boost volumes by 50% and cut costs by 20% by 2014.
Xstrata – the world’s biggest exporter of thermal coal for power plants – said it now aimed to add a further 30% volume growth by 2016.
Next year’s planned spending for new mines of $6.8bn will be mainly for coal, copper and nickel projects. It compares with $4.6bn estimated in August for 2010.
Xstrata added one more expansion project on Tuesday to the 20 it is already building, earmarking $1.3bn for the Ravensworth North coal mine in Australia.
The planned open cut mine will produce 8 million tonnes of export thermal coal and semi-soft coking coal after it starts producing in 2012.
In August, Xstrata added more than $5bn to its long-term capex budget after approving $4.2bn for the Las Bambas copper mine in Peru and $1.1bn for the Ulan West coal project in Australia.
Xstrata also said on Tuesday it would take a non-cash, after-tax impairment charge of $440m for its Araguaia nickel project in Brazil, which will appear as an exceptional item in annual results.
“This impairment is primarily due to the higher priority assigned to other growth projects in Xstrata Nickel’s pipeline,” it added.
