Coal

06.30
Coal | United | Australia

Troy Guthrie, Mineworker – Preparing to go underground on dayshift

Markets

Far East and Australian thermal coal markets

Demand for imported seaborne thermal coal in the Pacific Basin remained strong during 2005, and import tonnages grew by 8% for the second consecutive year. For annual contracts with the majority of Japanese utilities, Xstrata Coal secured a price of around $53.75 per tonne free on board (FOB), effective for the year commencing 1 April 2005. This represented a 19% price increase on the average contract price of $45 per tonne achieved in 2004. Annual supply to the Korean generating companies was priced later in the year at approximately $51 per tonne. Term/annual contracts made up 60% of Xstrata Coal's Australian managed export thermal sales in 2005, with the balance sold on the spot market.

Spot prices for seaborne thermal coal were stable through the first part of the year, remaining in the range between $51-53 per tonne between January and July. In the second half, a slight oversupply in the Pacific caused spot prices to slide to around $38 per tonne in late November. At these prices, increased Indian and Chinese buying interest appeared to put a floor under the market before problems with some nuclear power stations and a cold winter prompted some Japanese spot purchases and pushed prices higher once again. The FOB Newcastle spot price was at just over $40 per tonne at the close of 2005.

Major utilities in Japan, Korea and Taiwan entered 2005 with comfortable stock levels as a buffer against any repeat of the pricing shocks seen in 2004. In contrast to previous years, there were no major disruptions to Pacific supply during 2005. As a result, prices remained stable before easing as supply increased from Australia and Indonesia. Thermal coal demand into the major markets of Japan, Korea and Taiwan increased by an estimated 2% on average over 2004 levels, as new coal-fired power stations were commissioned. Encouragingly, the majority of 2005 demand growth was fuelled by the emerging economies of China, India and Latin America. This growth has more than compensated for a decline in overall Pacific exports to the European market in 2005.

Growth in Chinese demand for thermal coal continued to outpace increases in domestic production; this pushed domestic Chinese coal prices above import prices by the year end. As a result, not only did Chinese thermal coal exports decline by around 15% in 2005, but parts of China became net importers. India faces a similar shortfall of domestic thermal coal. Both India and Southern China are expected to become increasingly important destinations for seaborne export thermal coal.

Thermal coal supplies from Australia, China and Indonesia continue to dominate the Asia-Pacific region. Overall thermal coal exports from Australia grew by approximately 4% in 2005, driven by strong growth in New South Wales thermal coal exports as new capacity became available and ongoing improvements were made to the coal supply chain. The Hunter Valley coal chain's "capacity balancing scheme", approved by the Australian Competition and Consumer Commission (ACCC), allows increases in coal chain capacity to occur at a steady pace while maintaining the Newcastle port queue at a reasonable level and reducing unnecessary demurrage payments.

Despite the progress made in improving the Hunter Valley coal chain, Australia's export growth continued to be impacted by ongoing infrastructure constraints. Higher prices for coking coal led Australian producers to give preference on the rail and port system to coking coal exports wherever possible. This was most clearly seen in Queensland where 2005 thermal coal exports were below 2004 levels, despite robust demand.

With Chinese cut-backs and Australian constraints, Indonesian thermal coal producers have once again been able to claim the majority of the growth in the Pacific thermal coal market. Indonesian exports grew by approximately 18% in 2005 and, on a tonnage basis, Indonesia became the largest exporter of thermal coal in the world in 2005. In addition, Indonesia has been the only major Pacific producer to maintain sales to the European and Atlantic market, as high freight rates and high Asian FOB prices substantially reduced the competitiveness of Australian and Chinese material into that market. Russian thermal exports to the Pacific market remain port-constrained, with higher-value coking coal exports taking precedence.

The Asian market accounted for around 80% of Xstrata's managed export thermal coal sales from Australia in 2005. Korean and Taiwanese customers have joined Japanese buyers in increasing purchases from stable Australian term suppliers to protect against Chinese volatility and to maintain stocks of high quality Australian coal to blend with lower quality Indonesian material. The remainder of Xstrata's Australian thermal coal export sales are directed into Europe and the Americas, in particular into Mexico, where Xstrata maintained significant contract sales in 2005.

Xstrata Coal continues to maintain a stable and balanced domestic portfolio to provide geographic and currency diversification. Domestic thermal coal sales remain predominantly long-term contracts with power utilities in both New South Wales and Queensland and represent about 16% of total managed thermal coal sales from Xstrata Coal's Australian operations.

Newlands stockpile at dusk

European and South African thermal coal markets

Atlantic export coal prices continued to strengthen during 2005 as the European and Mediterranean market grew by around 4%. Continued strong prices largely reflected the robust but volatile energy market in Europe during the year as oil, gas and electricity prices reached record levels. Average prices increased by 24% to $48.50 per tonne from $39 per tonne in 2004, albeit with some volatility in pricing throughout the year. Spot prices in 2005 varied from $45 per tonne in the first quarter to $53 per tonne in the third quarter and settled at just below $40 per tonne at year end.

Although South African export tonnages were constrained during the first half of the year by continuing rail bottlenecks, sustained performance improvement from the rail network during the second half of the year resulted in export volumes of around 69 million tonnes compared to 66 million tonnes in 2004. Xstrata Coal's South African operations increased export volumes by some 5% in 2005, which accounted for two-thirds of the Group's South African sales tonnage.

High freight differentials and a robust pricing environment in Asia continued to constrain coal supplies to the European market from Pacific producers in 2005. While Indonesian exports to Europe did increase, these increases were more than offset by lower volumes from both Australia and China.

Export volumes from Colombia increased overall, despite some production shortfalls due to poor weather and limited equipment availability, but were absorbed by strong demand in North and South America, reducing the amount of Colombian coal exported to Europe in 2005. Demand for export thermal coal from the North and South American markets is expected to show strong growth going forward, underlining the importance of these markets for Atlantic export coal. Polish exports increased marginally from 2004, whilst Russian exports into Europe continued to escalate, particularly during periods of tight South African and Colombian availability. Increasing free on board (FOB) cost pressures in Russia are likely to curtail any further growth from this region and possibly lead to export reductions in 2006.

The advent of the EU emissions trading scheme (ETS) to trade carbon dioxide allowances between industrial installations began in early 2005 and initially created some uncertainty amongst European buyers. Markets quickly adjusted to accommodate the increased cost of carbon credits and seaborne coal exports to Europe are estimated to have increased by approximately 4% from 2004. Trading commenced at approximately €8 per tonne of carbon dioxide in January 2005, peaking at over €30 per tonne during the year, and eventually finding a trading range of €20 – €25 per tonne during the last quarter of 2005. Nonetheless, coal remained the least expensive fossil fuel for electricity generation and in both the UK and Germany the coal generating margin ("dark spread") was higher than the gas generating margin ("spark spread") on both a carbon adjusted ("clean") and unadjusted ("dirty") basis.

As a result, demand in Europe was particularly strong from the UK, due to continuing cutbacks in domestic coal production and the relatively attractive cost of coal for power generation, from Germany where attractive generating margins and high electricity prices supported coal burn and in the Iberian Peninsula, where very dry conditions limited the availability of hydropower, supporting robust coal demand. Increased demand from these regions was somewhat offset by a reduction in imported coal into Scandinavia due to abundant hydropower reserves.

Imports into North and South America increased significantly, by over 16% compared to 2004, predominantly from Colombia. Argentina and Chile both continued to import coal to overcome continued regional shortages in the supply of natural gas. Total import demand from India almost doubled compared to 2004, reaching approximately 23 million tonnes.

The South African domestic market, which accounted for around a third of Xstrata Coal's South African sales volumes, also remained robust during 2005, with further tightness in the supply of higher-grade products and increasing demand for lower-grade coals, driven by continued Eskom demand. Both new and extended spot and annual contracts for the supply of low quality coal to Eskom contributed to an overall increase in Xstrata's sales to Eskom of 70% over 2004 levels. This was achieved despite the 11% reduction in long-term Eskom contract sales volumes from the Douglas Tavistock Joint Venture (DTJV) due to production difficulties at the Middelburg mine. Xstrata's average Eskom pricing fell 10% in 2005 due to lower inflation-related adjustments coupled with a change in quality mix and delivery basis year-on-year.

Non-Eskom domestic sales volumes increased 22% in 2005, driven by marginal demand from both industrial users and local traders. The majority of non-Eskom domestic contracts from Xstrata South African coal operations achieved above-inflation increases, but this was coupled with a change in actual quality mix resulting in an average increase of 3% year-on-year.

Children play on the facilities at Middelburg care village

Front end loader loads coal at Rolleston open cut mine

Coking Coal Markets

Demand for export coking coal again remained strong in 2005 as global blast furnace output grew by 9%, making this the third consecutive year of annual growth in excess of 8%. This growth was once again concentrated in China where domestic output of iron and steel grew by approximately 30% in 2005. Production in the rest of Asia grew by approximately 1%, whilst blast furnace output declined in the rest of the world.

Global steel prices softened in most regions during 2005 from the peaks of 2004 but remain at relatively high levels. Although some, mostly European, steel-makers indicated a slight production slowdown in order to prevent oversupply and allow some inventory drawdown, most steel-makers across Asia continued to maximise output and demand for steel-making raw materials, particularly high quality coking coal, remains undiminished. Although increased availability and lower prices of Chinese coke slowed growth in demand for imported coking coal to the Indian coke makers, demand for hard coking coal continued to grow strongly as steel demand boomed in the strengthening Indian economy.

Compared to 2004, when exports from both Canada and Australia were constrained by infrastructure supply problems, hard coking coal production and exports increased significantly from both countries, in particular from Australia. This additional supply was eagerly consumed in the marketplace and there are no signs of oversupply developing in the near term. The United States maintained its high level of hard coking coal exports in 2005 as a swing producer to Asian markets, reflecting the strong global demand for coking coal, despite the relatively high cost of US suppliers.

For the 2005 – 2006 contract period, Xstrata Coal settled its hard coking coal contracts into the Asian and European markets at varying prices up to $135 per tonne, a similar level to the previous contract year. Unlike in the previous period, these prices were not required to be averaged with carryover tonnage at lower prices, as was the case due to production constraints at Oaky Creek in late 2003. Contract prices of around $120 per tonne were achieved for Collinsville semi-hard coking coal into the Asian steel market. These contract prices reflect the ongoing positive outlook in the medium to longer term for premium quality hard coking coals, such as the coals from Xstrata Coal's Oaky Creek and Collinsville operations, on the back of continuing growth in demand from markets such as China, India and South America.

The growth in global demand for hard coking coal along with the escalating steel price during last year's negotiations had a positive effect on New South Wales semi-soft coking coal prices. Semi-soft coking coal prices for the 2005 - 2006 contract year were agreed with long-term Asian customers at an average level of $79.50 per tonne, approximately 80% higher than the previous year's price. Semi-soft coking coal prices rose with hard coking coal prices and were helped by the strong global thermal coal market which has, in the past, set a floor price for this type of coking coal.

During 2005, the vast majority of Xstrata Coal's hard coking coal was sold under long-term contracts, with 56% output going to Asian markets, 27% to Europe, and the balance to the Americas, Africa, Australia and the Middle East. Xstrata Coal's semi-soft coking coal production comes from its New South Wales operations; almost all semi-soft sales are exported to Asian markets. Japanese steel mills were once again the dominant buyers of this material in 2005, accounting for over 75% of total sales. Most semi-soft coking coal was also sold under long-term contracts with spot market sales comprising less than 10% of total sales of this product.

Operations

Across Xstrata Coal's operations globally, there has been significant cost inflation for various inputs. Despite this, Xstrata Coal's thermal coal business was able to demonstrate real cost savings in 2005. The coking coal business was negatively impacted by labour supply shortages, increased equipment and input prices and a roof fall at the Oaky North underground mine.

The Australian Bureau of Statistics has indicated that price inflation on mining materials on an annualised basis (for period ending December 2005) was around 9.3% for open cut and 9.6% for underground mines. These increases take into account fuel costs, which increased significantly worldwide, and the cost of explosives, which rose substantially due to shortage of supply. Despite these significant cost pressures, overall costs increased by just $7 million in 2005.

The inflationary environment is expected to continue for the foreseeable future. Xstrata Coal will continue to mitigate these increases as far as possible through initiatives to achieve increased productivities and operational synergies.

Australian thermal coal

Higher coal prices and increased sales volumes from Xstrata's Australian thermal coal operations, together with continued strong cost control, increased EBIT by 45% to $657.7 million in 2005.

Increased production from Beltana underground, the Ulan Complex and the commencement of production from Rolleston, partially offset by the impact of the closure of the Newlands Southern underground mine in the second half of 2005, led to an 8% increase in consolidated saleable production, which reached 38.4 million tonnes in 2005. Production from Newlands Southern underground will be replaced by the newly-developed Northern underground, which will begin longwall operations in the first quarter of 2006.

Real unit costs in local currency increased by 2% from 2004. Excluding the impact of "revenue related" costs – primarily the government ad valorem royalty, which rose in line with strong coal prices – real unit costs for Australian thermal coal were reduced by 1% year-on-year, on top of a strong cost performance in 2004. Xstrata's thermal coal operations largely mitigated the impact of increased cost inflation across the industry through improved productivities, increased production from lower cost operations and benefits derived from capital expenditures aimed at operational improvements. As a result of the continued strength of the Australian dollar, US dollar unit cash costs increased by 9% from 2004.

Xstrata Coal's thermal coal mines include some of the lowest cost operations in Australia. Continued productivity improvements at Beltana culminated in the longwall achieving what is considered to be an Australian, if not global, production record in November 2005 of 50,000 tonnes in one day, 250,000 tonnes in one week and one million tonnes in a month.

Rolleston, Xstrata's new open cut thermal coal mine, began production in September 2005 on time and on budget. The Rolleston operation produced 932,000 tonnes in 2005 and will produce six million tonnes per annum for export and two million tonnes per annum for domestic consumption when it reaches full production in 2008.

Export sales from Australia increased by 2% to 33 million tonnes. In addition to taking advantage of improved performance at the Port of Newcastle, Xstrata Coal increased sales from its Baal Bone operation to capitalise on available capacity from Port Kembla. Domestic sales increased by 0.7 million tonnes as a result of higher demand from local power generators.

Australian coking coal

Significantly higher prices for coking coal in 2005 boosted EBIT by 118% to $243.5 million. Export sales of coking coal were slightly lower than 2004 levels at 4.8 million tonnes down from 4.9 million tonnes in 2004, while total production declined by 7% compared to the prior year. Significant productivity improvements at Oaky North underground of 175,000 tonnes or an increase of 11% on 2004 were offset by a roof fall at Oaky North, which impacted production by approximately 130,000 tonnes and by planned reduced production at the Oaky Creek open cut.

Real local unit cash costs rose by 18%, primarily as a result of demurrage associated with the congestion at Dalrymple Bay Coal Terminal (DBCT) in the first half of 2005, a real increase in the cost of mining inputs (including fuel, steel and explosives) and increased royalty payments as a result of higher coal prices. The congestion at DBCT resulted in a significant increase in demurrage charges ($3.54 per tonne in 2005 compared to $1.47 per tonne in 2004). These items combined with the continued strengthening of the Australian dollar, resulted in a 25% increase in US dollar cash costs period-on-period. Costs were also impacted by the labour shortage in central Queensland with increased costs for contract labour.

Breyten HIV/AIDS Clinic

Reconstruction and realignment of Maryland creek at New Wallsend

South Africa

Xstrata's Boschmans, WitCons, South Witbank, Tavistock and Tselentis operations achieved production records in 2005. Overall saleable production was 3% lower than in 2004, at 18.6 million tonnes, mainly due to planned output reductions at Waterpan following the closure of the underground mine and at Phoenix due to changes in coal grades required by Eskom.

Increased sales volumes – in excess of 20 million tonnes for the first time – coupled with higher export coal prices increased EBIT by 74% to $178.1 million, despite the continued strength of the South African rand. Export sales increased by 5% to 13.5 million tonnes. Domestic non-Eskom sales increased to 2.3 million tonnes, up 21% and sales to Eskom increased by 70% to 4.5 million tonnes.

After adjusting for one-off items, local currency cash unit costs in real terms were 1.2% higher than 2004 levels, primarily as a result of higher costs incurred at the two Douglas Tavistock Joint Venture operations (Douglas and Middelburg mines), neither of which are managed by Xstrata, offsetting productivity improvements, mainly at Boschmans and Tavistock, and a higher proportion of domestic coal sales (from 26% in 2004 to 34% in 2005). The South African rand was marginally stronger during the year, increasing US dollar unit cash costs by 6% compared to the previous year.

Developments

In December 2005, Xstrata Coal and its partners in the Xstrata Donkin Mine Development Alliance won the exclusive right to pursue exploration of the Donkin coal resource in Nova Scotia, Canada. Evaluation of the thermal and metallurgical coal resource will begin in early 2006, with feasibility studies expected to continue for approximately two years. Xstrata Coal holds a 66% participating interest in the Alliance. Other partners include Kaoclay Resources (Canada), which holds a 20% interest, and Atlantic Green Energy Development (USA) with the remaining 14% interest.

Longwall surface mini build at Ulan underground mine

Vineyards coexist with mining at Beltana

Australia

Capital expenditure for Xstrata Coal's Australian operations totalled $403.6 million for 2005, with the majority of the expenditure in Queensland. Key capital expenditure projects in 2005 include:

• completion of Rolleston Coal mine, on time and on budget, which began production in September 2005;
• commencement of the replacement of the existing Newlands coal handling and preparation plant with a new dense-medium cyclone plant. This replacement will enable the production of additional coking coal product from the existing reserves as well as providing additional capacity and will continue in 2006;
• installation of a second longwall at Oaky Creek to allow for recovery of previously unplanned resources and replacement of higher cost open cut operations;
• construction within capital budget of the Mount Owen dump hopper;
• purchase of a $52 million (A$68 million) state-of-the-art longwall system and $12 million (A$16 million) underground drift conveyor system for the Ulan underground mine, which will be operational in 2006;
• upgrading the coal preparation plant at the Bulga complex for $11 million (A$14 million) which increased yield and lowered operating costs;
• development of the Ravensworth West operation following settlement of six-year supply contract with Macquarie Generation, a domestic generator. Mining operations commenced in early 2006; and
• continuing development of the Northern underground at Newlands to replace the Southern underground.

Capital expenditure for Australia in 2006 is expected to be lower than 2005, as some of the major projects which accounted for significant capital expenditures in 2005 become operational. Expenditures will continue to be made at Rolleston, Newlands Northern underground, Ulan underground, and for the coal handling and preparation plant upgrade at Newlands, although at reduced levels from 2005.

South Africa

Capital expenditure for Xstrata Coal's South African operations totalled $65 million (ZAR416 million), the majority of which was spent on sustaining projects. An amount of $5 million (ZAR34 million) was spent on initial pre-feasibility and feasibility work on the following projects:

• the finalisation of the Goedgevonden feasibility study.
• The mine will produce around 3 million additional export tonnes per annum in addition to 3 to 4 million tonnes of Eskom supply;
• further studies following the pre-feasibility work for a new processing plant and export load out system located at Boschmans. This plant will process coal from Boschmans, Waterpan and WitCons and will provide significant improvements in yield and operating cost;
• full feasibility study for the South Witbank/Tavistock 5 Seam operations to detail the mining and beneficiation of the high-value 5-seam coal to service the domestic metallurgical market and the export market; and
• pre-feasibility study on the Douglas Middelburg Optimisation Project (managed by BHP Billiton) designed to extend the economic life of the complex to 2033.

Xstrata is planning the following expansionary projects to commence in 2006:

• the development of the Goedgevonden Mine;
• the development of the number 5 coal seam at South Witbank and Tavistock mines; and
• feasibility study for a new high capacity coal processing plant for the Tweefontein operation.

On 28 February 2006, Xstrata and African Rainbow Minerals (ARM) established a new black-owned and controlled coal company, ARM Coal. The newly established ARM Coal will own a 20% participation share in Xstrata's South African coal business, comprising interests in 13 coal operations, providing a significant stake in the thermal coal export and domestic markets, with exposure to some 20 million tonnes of annual production and immediate access to cash flows. In addition, ARM Coal will hold a majority 51% interest in the Goedgevonden Project, through a joint venture with Xstrata. As the majority shareholder of the Goedgevonden Project, ARM Coal will apply for additional export capacity for the project in the revised Phase V expansion of Richards Bay Coal Terminal. In total, ARM Coal will have an effective participation interest in 26% of Xstrata's South African coal business.

Richards Bay Coal Terminal (RBCT) announced an expansion from its existing 72 million tonnes per annum to 92 million tonnes per annum. This includes the original Phase 5 expansion, which has been under discussion for some time. The total cost will be approximately $167 million (ZAR1 billion) and the expansion is expected to be completed by July 2008. The precise phasing of the incremental export tonnage is subject to colliery and rail infrastructure developments and will be determined once the projects that will utilise the increase in terminal capacity have been identified. Initial estimates, however, indicate that the full rail and mine capacity will only be available after 2009.

Special provision will be made to encourage a new generation of coal exporters by earmarking up to 4 million tonnes per annum by April 2006 for emerging black economic empowerment (BEE) exporters, which is consistent with the current Quattro arrangements. South Dunes Coal Terminal, which will be two-thirds controlled by historically disadvantaged South Africans (HDSAs), will take up a further 6 million tonnes per annum of the expansion. The remaining 10 million tonnes per annum of the expansion capacity will be opened up for subscription to all with an emphasis on empowerment to facilitate the transformation of RBCT, in line with the continuing transformation of South Africa's coal industry under the Mining Charter.

Rolleston dragline

Health, Safety, Environment and Community (HSEC)

In 2005 all Xstrata Coal sites were independently audited against Xstrata's Health, Safety, Environment, and Community (HSEC) Policy and Standards. Action plans are being implemented to address outcomes of the audits.

Xstrata Coal's primary objective is to be a zero-fatality business. Regrettably, this target was not met and two employees lost their lives at South African operations in 2005. An extensive safety programme was developed and implemented during late 2004 and early 2005 to address fatal risks, hazards and, importantly, behavioural reasons that lead to fatalities at the South African operations. Best practice and expertise is being shared with Xstrata's high-performing Australian operations, which have not sustained a fatality in over four years. In particular, the supervisor safety leadership training programme and structured safety communication and engagement between management, supervisors and workers are generating positive results. Xstrata Coal continues to believe that operating a fatality-free business is achievable and is a key objective for 2006. The total recordable injury frequency rate (TRIFR) remained stable at 16.4 while the lost time injury frequency rate improved to 3.9 from 4.9 in 2004. Xstrata Coal will continue to strive for an annual 20% reduction in injury frequency rates in 2006.

Xstrata Coal's 30 managed operations achieved its target of zero category 3, 4 or 5 environmental incidents during 2005 and no fines or penalties were issued. A number of Xstrata Coal's operations are situated in ecologically important areas. In March 2005, Xstrata Coal launched its Biodiversity Strategy to undertake progressive rehabilitation of land disturbed by mining, to provide sustainable lands post-mine closure and to facilitate biodiversity conservation. Mount Owen mine was recognised for excellence in environmental management and won the 2005 Hunter-Central Rivers Coal Industry Environmental Award in November 2005 for its industry-leading Biodiversity Management Programme.

Underground miners at Arthur Taylor

Xstrata Coal is committed to working with government and industry to research, develop and commercialise clean coal, methane utilisation and carbon sequestration projects. The importance of continuing and expanding such collaborative efforts in advancing near zero emissions technologies was a key focus of the Asia-Pacific Partnership for Clean Development and Climate Ministerial meetings held in January 2006. Xstrata Coal was a participant in the industry dialogue as part of this inaugural meeting of Ministers from Australia, China, India, Japan, the Republic of Korea and the United States on addressing the challenges of climate change.

In addition to its collaborative efforts, Xstrata Coal has also lodged its cooperative agreement for the Australian Government's Greenhouse Challenge Plus programme, which outlines plans for reduction of greenhouse gas emissions from Xstrata Coal's Australian operations.

Xstrata Coal in South Africa continued to make good progress with aligning the business with the requirements of the South African Mineral and Petroleum Resources Development Act. The business is well positioned in terms of the principal transformational elements of the Mining Charter and Scorecard including human resource development and the representation of historically disadvantaged South Africans (HDSAs) in management, housing and accommodation, procurement, as well as social and community development.

On 1 March 2006, Xstrata Coal and African Rainbow Minerals (ARM), announced the formation of a new black-controlled coal company, ARM Coal. As a result of the transaction, ARM Coal will have an immediate effective interest in 26% of Xstrata's South African coal operations. Xstrata Coal has also agreed to grant ARM an option to increase its participation by 10%, which would result in HDSA control of 36% of Xstrata Coal South Africa.

In 2005 Xstrata Coal has set aside $9.2 million to support a range of initiatives to support communities associated with its South African and Australian operations in the areas of enterprise and job creation, environment, education, social and community development, health, culture and art. In South Africa, Xstrata Coal has particularly focused on the provision of HIV/AIDS testing, counselling and treatment programmes for employees and, more recently, for local communities, working in partnership with service providers, NGOs and government.

In early 2005, Xstrata Coal in Australia launched a $964,000 (AU$1.3 million) corporate social involvement programme to support a range of community initiatives in New South Wales and Queensland, working with NGOs, local and state government, universities and volunteer organisations.