Alloys

Developments

Ferrochrome

The Bokamoso pelletising project reached full production capacity during 2008 and exceeded name-plate capacity by more than 15% for three consecutive months.

The additional agglomeration capacity provided by the Lion and Bokamoso projects allowed for the production and use of increased volumes of fine UG2 chrome ore. Optimisation of the UG2 concentrating plants and additional production from the Mototolo and Eland concentrators resulted in a production increase of 20% to 1.5 million tonnes UG2 during 2008. The maximum use of UG2 is favoured during periods of reduced ferrochrome production at the smelters in order to optimise production costs.

The Boshoek opencast reserves have been successfully developed and are now in operation at a sustainable level. The development of the Magareng opencast reserves and mine was completed during 2008 to supplement chromite ore supplies to Lion and Lydenburg.

Xstrata Alloys has submitted 11 applications for new order prospecting and mining rights under South Africa’s Mineral and Petroleum Resources Development Act. All of these applications have been granted to Xstrata Alloys by the Department of Minerals and Energy. Of the 11 applications made to convert existing old order mining rights, nine have been granted and notarially executed. The outstanding conversions are being processed.

Platinum Group Metals

The Western Decline System at the Elandsfontein mine will commence sinking in early 2009 and the Eastern Decline System is scheduled to follow approximately 18 months later. Production from the underground operations is scheduled to replace opencast tonnage, maintaining current milling throughput. The Western Decline System should reach steady state production by 2011 and the Eastern Decline System by 2012, doubling current production levels. Elandsfontein has an estimated mine life of approximately 50 years.

The acquisition of the De Wildt property for $12 million has enhanced the Elandsfontein resource and will result in an extension of the open pit mineable area as well as provide access to the Madibeng lease area. An extensive exploration programme at the Madibeng and De Wildt properties commenced during August 2008. Exploration drilling is also under way at the Beestkraal property, where the first five boreholes have intersected both the Merensky and UG2 reef horizons.

A binding Heads of Agreement was concluded with Nkwe Platinum Ltd and Genorah Resources Ltd in August, giving Xstrata the exclusive option to acquire a 50% interest in the project located on the Eastern Limb of the Bushveld Igneous Complex. Pre-feasibility work is progressing well with a total of 53,000 metres of exploration drilling completed to date. The pre-feasibility drilling programme is scheduled to be completed in the third quarter of 2009.