Operating Review | Technology Services

Xstrata Technology Services supports the processes involved in mining. It comprises Xstrata Technology, based in Brisbane, a specialist technology and solutions provider to the global mining industry; and, since the acquisition of Falconbridge in late 2006, Xstrata Process Support, based in Sudbury, which provides technological support to Xstrata’s own operations. During 2007, Xstrata Process Support has extended its services to third-party customers, in line with its strategy of becoming a self-sustaining, commercial technology services business unit.

Xstrata Technology

Xstrata Technology continued to experience strong demand for its products in 2007, with revenue increasing by 81% compared to 2006. Xstrata Technology’s results in 2007 demonstrate the successful integration of the KIDD technologies from Falconbridge into the product portfolio. Following the further integration of Xstrata Process Support and the formation of Xstrata Technology Services, the business unit is now very well positioned to provide the mining industry with additional core equipment choices underpinned by Xstrata Technology’s design and operating expertise. In 2007, demand grew for technology packages. Xstrata Technology is uniquely positioned to meet this demand and its order book remains strong into 2008 and beyond.

Albion Process™

The Albion Process™ is a low cost, simple atmospheric leach process to recover metals from refractory ores. Demand for the technology grew in 2007, with 21 work programmes completed and numerous studies conducted, for both Xstrata businesses and other major mining companies. Licence agreements have been signed with Dominica Gold and European Goldfields, and construction of the first plant is under way at Las Lagunas in the Dominican Republic to recover refractory gold from tailings.

IsaMill™

IsaMill™ Technology is a revolutionary grinding technology that significantly increases the efficiency of mineral grinding and processing. Demand for this product grew rapidly in 2007 as the IsaMill technology moved from niche fine grinding to mainstream grinding applications in response to market demand. Total installed capacity more than doubled during 2007. The mainstream mineral grinding market offers significant opportunities for a more energy efficient grinding technology such as IsaMill, which is being recognised by orders from major mining companies, and installations across the world include Africa, Australasia, central and south east Asia and North America.

ISASMELT™

In 2007, the copper smelter modernisation project at Southern Peru Copper Corporation (SPCC) was successfully completed, representing the first application of ISASMELT™ technology in Latin America. The furnace replaced two reverberatory furnaces and a Teniente Converter while cutting plant emissions, especially sulphur dioxide, and allowing SPCC to meet new Peruvian environmental regulations. The growing acceptance of the technology in the region was confirmed by the signing of an ISASMELT™ agreement for Doe Run Peru's La Oroya smelter. Construction of a lead ISASMELT™ and a copper ISASMELT™ furnace commenced at Kazzinc in Kazakhstan, the first site to install two furnaces concurrently. Mopani Copper Mines has also agreed to install a new Isa Convert™ furnace, following the start-up of their ISASMELT™ furnace in 2006. The Isa Convert™ furnace is the first of its kind to be constructed and is designed to produce 50,000 tonnes per annum of blister copper. It improves the environmental performance of copper smelting, compared with the conventional Peirce Smith converter technology.

Jameson Cell™

The Jameson Cell™ is a high-intensity flotation technology which is used to develop more efficient flotation circuits. Business continued to be strong, with orders for coal and increasingly base metals applications. The successful commissioning of the technology at TeckCominco’s Red Dog mine, an order from Oxiana’s Prominent Hill and numerous promising test programmes have shown the growing interest by base metals producers for the Jameson Cell™.

Tankhouse Technology (ISAPROCESS™ and KIDD PROCESS)

Buoyant market conditions continued throughout 2007 for both ISA and KIDD technology offerings. The group realised a 42% increase in revenue in 2007, the first full year for the combined ISA and KIDD technologies, following the Falconbridge acquisition. There were record cathode sales from the Townsville manufacturing facility and the Calama site in Chile, where cathodes are manufactured under licence.

Xstrata Process Support (XPS)

Demand from Xstrata’s operations continued to be strong for Xstrata Process Support’s expertise. External customers accounted for 10% of total revenue in 2007; this proportion is expected to increase as Xstrata Process Support continues to commercialise its unique expertise. From 1 January 2008, Xstrata Process Support financial results will be included in Xstrata Technology Services reporting.

XPS provides high value technical services through four separate groups:

Process Mineralogy

Process Mineralogy is a mineral processing and mineral science group that utilises quantitative mineralogy, sampling, statistics and flotation test work to maximise metal recoveries to add value to new mine projects and existing operations. Process Mineralogy helped to increase the net present value of Xstrata Nickel’s Kabanga project by improving flow sheet development and advancement, supported by a pilot plant demonstration. At the Raglan concentrator, Process Mineralogy improved metal recoveries through xanthate trials and achieved production gains at the Montcalm operations after Process Mineralogy’s process survey recommendations were implemented.

Extractive Metallurgy

Extractive Metallurgy provides expert pyrometallurgical and hydrometallurgical services to smelters and refineries. In 2007, Extractive Metallurgy’s primary client was Xstrata Nickel, where key areas of value creation and risk mitigation were implemented at the Falcondo ferronickel smelter, the Araguaia laterite project, the Sudbury smelter and through supporting the business development group in Toronto. Extractive Metallurgy also provided pyrometallurgical assistance to Xstrata Copper at Mount Isa and hydrometallurgy test work was completed for the Altonorte operation.

Process Control

In 2007, Process Control provided services in process control development for mineral and metallurgical processes primarily to Xstrata Nickel and Xstrata Copper’s global operations. Significant production gains were achieved at Raglan through the introduction of automatic mill feed control and the Sudbury operations achieved optimum throughput. Electric arc furnace controllers reduced average power deviation at the Falcondo nickel smelter and substantial process control improvements developed at the Kidd operations. The Process Control group also provided assistance to the Altonorte and Mount Isa smelters.

Materials Technology

Materials Technology provides materials of construction selection, equipment construction specifications, quality assurance, plant reliability inspections and root cause failure analyses. Materials Technology makes important ongoing contributions to asset management, plant reliability and safety, particularly for sulphuric acid plants, storage tanks, and process equipment subject to high temperature and wear. Materials Technology expanded established client bases at Xstrata’s Canadian and Chilean operations in 2007 to include Mount Isa in Australia and a number of external clients.

A wireless pen-table system at Minera Alumbrera’s drill core storage facility