Zinc

Developments

Zinc Lead Australia

A strategic review aimed at optimising efficiency and productivity and securing the long-term future of Mount Isa operations during challenging operating conditions has resulted in a restructuring of Xstrata Zinc’s Mount Isa zinc-lead operations includes placing its Handlebar Hill operation on care and maintenance from early February 2009. Production from Handlebar Hill will be replaced by increased output from the George Fisher and Black Star operations at Mount Isa.

The open pit development at McArthur River was completed on schedule during 2008. The capacity of the concentrator at McArthur River Mine was increased from annual throughput of 1.8 million tonnes of ore to 2.5 million tonnes of ore. The concentrator achieved the design 2.5 million tonnes throughput rate in November 2008.

However, production in December was reduced by approximately 25% in the light of current market conditions, and all mining and civil works were suspended on 17 December, following a decision by the Full Bench of the Australian Federal Court to invalidate the original approval granted for the MRM expansion due to a procedural error by the Federal Government. MRM resubmitted its application to the Federal Environment Minister shortly after this judgement and on 22 January, the Minister gave preliminary, conditional approval for the expansion, subject to a 10-day consultation period. Stockpiled ore was processed at the site while mining was suspended, but was depleted by 23 January, at which time the operation was placed into care and maintenance. On 20 February, the Minister approved MRM’s open pit development and operations have recommenced.

Zinc Lead Europe

Exploration efforts in Ireland, accomplished with a 23.6% joint venture partner, Minco plc, have identified significant zinc mineralisation at the Pallas Green property near Limerick. An exploration programme was carried out in 2008 to define economic reserves and initiate baseline studies and further work is planned for 2009.

Sales volumes
	Year ended 31.12.08	Year ended 31.12.07
Australia – Mount Isa
Zinc in concentrate (t) third-party sales (payable metal)	171,137	94,911
Zinc in concentrate (t) inter-company sales (payable metal)	69,580	102,204
Total zinc (t) (payable metal)	240,717	197,115
Lead in concentrate (t) third-party sales (payable metal)	3,656	2,617
Lead in bullion (t) inter-company sales (payable metal)	155,401	124,826
Total lead (t) (payable metal)	159,057	127,443
Silver in concentrate (koz) third-party sales (payable metal)	385	336
Silver in bullion (koz) inter-company sales (payable metal)	9,172	7,678
Total silver (koz) (payable metal)	9,557	8,014
Australia – McArthur River
Zinc in concentrate (t) third-party sales (payable metal)	115,241	104,319
Lead in concentrate (t) third-party sales (payable metal)	29,945	20,358
Silver in concentrate (koz) third-party sales (payable metal)	318	199
Australia – Lennard Shelf*
Zinc in concentrate (t) third-party sales (payable metal)	13,617	10,162
Zinc in concentrate (t) inter-company sales (payable metal)	3,561	5,079
Total zinc in concentrate (t)(payable metal)	17,178	15,241
Lead in concentrate (t) third-party sales (payable metal)	2,117	2,637
Lead in concentrate (t)inter-company sales (payable metal)	2,291	2,994
Total lead in concentrate (t) (payable metal)	4,408	5,631
Europe – San Juan de Nieva
Refined zinc (t)	432,507	457,210
Europe – Nordenham
Refined zinc (t)	144,994	146,151
Noranda zinc (t)	–	5,709
Europe – Northfleet
Refined lead (t)	134,445	124,667
Noranda lead (t)	–	3,562
Refined silver (koz)	7,729	6,133
North America – Brunswick
Zinc in concentrate (t) third-party sales (payable metal)	95,755	32,359
Zinc in concentrate (t) inter-company sales (payable metal)	89,933	162,022
Total zinc (t) (payable metal)	185,688	194,381
Lead concentrate (t) third-party sales (payable metal)	5,982	12,279
Lead concentrate (t) inter-company sales (payable metal)	49,285	47,736
Zinc in bulk concentrate (t) third-party sales (payable metal)	10,111	17,119
Lead in bulk concentrate (t) third-party sales (payable metal)	8,290	13,224
Silver in bulk concentrate (koz) third-party sales (payable metal)	522	785
Silver in bulk concentrate (koz) inter-company sales (payable metal)	–	–
Refined lead & Alloys (t)	77,228	44,105
Silver doré (koz) inter-company sales	4,810	3,987
North America – CEZ**
Refined zinc (t)	64,669	65,533
Perseverance
Zinc in concentrate (t) third-party sales (payable metal)	8,269	–
Zinc in concentrate (t) inter-company sales (payable metal)	39,140	–
Total zinc (t) (payable metal)	47,409	–
North America – Kidd Creek
Refined zinc (t)	124,917	126,355
Peru – Antamina zinc***
Zinc in concentrate (t) third-party sales (payable metal)	99,441	68,937
Zinc in concentrate (t) inter-company sales (payable metal)	–	14,883
Total zinc (t) (payable metal)	99,441	83,820
Total zinc metal third-party sales (t)	767,087	800,958
Total zinc in concentrate third party sales (t)	513,571	327,807
Total lead metal third-party sales (t)	211,673	172,334
Total lead in concentrate third party sales (t)	49,990	51,115
Total silver metal third-party sales (koz)	7,729	6,133
Total silver in concentrate third party sales (koz)	1,225	1,320
Average LME zinc price (US$/t)	1,870	3,257
Average LME lead price (US$/t)	2,084	2,594