Other businesses

Forestry

Average prices for pulplogs fell by 3.7% to $26 per cubic metre during 2004, however production rose by 35%, maintaining turnover at a similar level to 2003, at $2.9 million. Turnover was impacted by the negative exchange rate which saw the US dollar weaken against the Chilean peso during 2004, closing the year over 6% weaker than at the end of 2003.

EBIT fell by $0.6 million to a loss of $1.5 million, impacted by a slightly higher depreciation and amortisation charge, which, although almost constant in local currency terms, was also impacted by local currency strength against the US dollar.

In January 2005, Xstrata announced the sale of the forestry division, Forestal Los Lagos (FLL), to Forestal del Sur SA and Forestal Valdivia SA, a subsidiary of Forestal Arauco. The disposal proceeds amount to $24 million and as a result of the sale, Xstrata will be released from its obligations in respect of the $12 million project debt related to FLL.

Technology

Xstrata Technology experienced strong demand for its technology solutions in 2004 as producers sought to capitalise on the current buoyant environment for metals and mining products. On a standalone basis, turnover increased to $44 million, while EBIT rose by over 65% compared to 2003.

ISA SMELT cemented its benchmark status in high intensity smelting technology, being chosen as the preferred technology for the Southern Peru Copper and Mopani (Zambia) smelter projects. Work will continue on these projects in 2005/6.

Xstrata Technology's ISA PROCESS copper refining technology was commissioned in a number of projects, and has been chosen for the 200,000 tonnes per annum Spence Project in Chile (BHP Billiton), for delivery commencing 2005.

ISA MILL commissioned the 2.6 megawatt M10,000 mill for Anglo Platinum, a significant advance for the technology, making it the largest fine grinding mill available. Jameson Cell sales were in line with previous years with a build up of orders expected for 2005, particularly in China.

The outlook for 2005 is encouraging, with high levels of interest being expressed in the entire portfolio of technology offerings within Xstrata Technology due to sustained strength in commodity markets. Planning for 2006 includes significant investment in product development to improve the product range further.

Townsville port operations

Xstrata holds long-term leases and operates bulk concentrate and berthing facilities at Townsville Port for products from Mount Isa and third parties. These include concentrate, fertiliser, metals and general break bulk cargo. Turnover increased to $8.4 million at the port operations in 2004 with increased tonnages for all products through the facilities, as demand for export metals and mining products increased. Throughput is expected to continue at a steady pace during 2005. From 1 January 2005, the financial performance of the Townsville port operations will be reported within Xstrata Copper.