Suspended Expenditure

Xstrata suspended expenditure on Wandoan and Ernst Henry Project

04.06.2010 | Editor: Marcel Dröttboom

Project Details

The Ernest Henry underground mine project was approved by the Xstrata plc Board in December 2009 and would have extended the life of the EHM operations from 2013 to at least 2024, with a total capital investment of AUD 589 million. EHM’s current open pit mining operations would have been progressively transformed into a major shaft underground mine through this investment. The announcement involves the loss of approximately 60 contractor jobs with immediate effect and a further 190 positions that would have been created over the next 18 months. Although the development of the smaller decline underground mine is currently planned to continue, the suspension of the majority of the underground development project will halve the mine’s planned annual production rate from 2012 and reduce the planned life of the operations by at least five years, from 2024 to 2019. Xstrata Copper Chief Executive Charlie Sartain said, “The shelving of the capital investment for the EHM underground mine development so soon after the corporate approvals were obtained is extremely disappointing and threatens the longer term viability of our operations in north Queensland. This has been a very difficult decision, particularly with its immediate impact on our workforce and the local communities, and given our strong collaboration with the Queensland Government last year to obtain internal approvals for the project. This project clearly would have benefited the region and Queensland as a whole.”

Xstrata Coal has spent approximately AUD 200 million over three years progressing the Wandoan Coal Project through feasibility studies. Early works scheduled to commence from July 2010 will be suspended immediately, including drilling, the construction of workers’ accommodation, communications and road upgrades. The Wandoan Coal Project and associated infrastructure and exploration initiatives were to provide over 3000 jobs throughout construction and operation over the next five years and open up the Surat Basin as the next major new export region for Queensland. “The RSPT puts the future of this globally significant AUD6 billion project at risk, together with the development of the Surat Basin as an internationally competitive export coal region,” Xstrata Coal Chief Executive Peter Freyberg said. “We are deeply disappointed to put these important activities on hold and regret the significant impact their suspension will have on jobs, our project partners and surrounding regional communities. Our priority is to discuss the implications of this suspension with affected communities and other stakeholders. We will honour all obligations and agreements entered into with landowners and key stakeholders to date.”