Group overview and strategy
Since its initial public offering in March 2002, Xstrata has grown rapidly to become one of the largest diversified mining companies in the world, with top five industry positions in copper, export thermal coal, export coking coal, ferrochrome, zinc and nickel. In addition, the Group has a growing platinum business, recycling facilities, additional exposures to gold, cobalt, lead, silver and vanadium and a suite of mining and metals-related technologies, many of which are industry leaders. Our operations and projects span 19 countries and we have corporate offices in a further six countries.
Xstrata's primary strategic aim is to create superior shareholder value in a sustainable manner. We aim to do this by:
- Offering shareholders exposure to an attractive portfolio of assets diversified by commodity, currency, geographic location and end-use segment
- Growing our business through developing our portfolio of organic growth projects and executing value-adding acquisitions
- Continuously improving the quality of our assets, for example, through year-on-year operating cost reductions, mine life extensions and productivity improvements
- Achieving and maintaining industry-leading standards of health, safety and environmental performance and working in partnership with stakeholders for mutual benefits, balancing economic, ethical, environmental and social considerations in how we manage our business
- Fostering a high performance and entrepreneurial culture through a highly devolved management structure, with appropriate incentives for exceptional performance
- Conducting our business activities ethically and with the maximum transparency commercially possible
Since its inception, the Group's strategy has been delivered through:
- Growth through acquisition
- Operational transformation and enhancement to net present value
- Organic growth
Xstrata's strategy evolves
Our strategy will continue to rest on delivery against each of these three pillars, but over time, the emphasis has shifted. Initially, Xstrata's strategy was, of necessity, dominated by acquisitive growth, to build a major diversified mining group with the scale and diversity to compete effectively with the leading companies in the industry.
Following each acquisition, Xstrata's operational teams have fundamentally transformed the acquired operations to extract synergies with existing operations and enhance their competitiveness, improve safety, environmental and social performance to industry-leading standards, extend the reserve and resource base and expected life of the operations and develop expansion or associated growth options.
Xstrata's next phase of growth will be delivered predominantly from its portfolio of organic growth projects that were accumulated through a series of transformative and bolt-on acquisitions. This next phase of transformation will deliver significant growth in volumes, while simultaneously reducing the unit costs of Xstrata's commodities, further enhancing the quality of Xstrata's portfolio and improving the Group's competitive position. Despite this emphasis on organic growth, we will continue to assess opportunities to create value through growth by acquisition or through mergers. During 2009, Xstrata approached Anglo American to propose a merger of the two companies. Xstrata's proposal was rejected by the Anglo American Board and in October, Xstrata confirmed that it had no intention of making an unsolicited offer for Anglo American. Xstrata also successfully acquired an option to acquire a majority stake in an early stage iron ore project in the Republic of Congo during the year, which, if exercised, would provide Xstrata entry into a new, highly attractive commodity.
The continuous improvement of our assets is also an ongoing imperative, including safety performance, environmental management and our engagement with and contribution to communities and other stakeholders in our business. Each commodity business is mandated to improve the net present value of its underlying business to overcome the 'strategic gap' faced by the mining industry - namely the wasting nature of mining companies' finite assets and the increasing difficulty of maintaining production from existing operations due to falling grades and higher costs.