Strategic resources

We consider the following resources to be essential to the effective execution of our strategy.

Diversified portfolio

Xstrata’s portfolio is diversified by commodity and by geography, balancing the risks associated with specific commodity price cycles and operating locations and providing investors with more reliable and stable cash flows. Diversification also engenders healthy competition for capital between Xstrata’s commodity businesses.

Extensive organic growth pipeline

Xstrata benefits from a significant growth pipeline across a number of commodities, allowing the strategic sequencing of projects and deployment of capital from which significant volume growth and superior returns can be achieved. Those elements of Xstrata’s extensive growth pipeline which have been deferred remain available to be accelerated at the appropriate time.

Acquisition and integration capability

Xstrata has developed and demonstrated a significant capability in the opportunistic identification of acquisition opportunities; the ability to execute transactions where the value proposition is compelling; and the rapid integration of acquired operations. This capability has been replicated at the commodity business level, enabling smaller bolt-on acquisitions to be completed.

Devolved management structure

Xstrata’s management model is highly devolved and comprises a very lean corporate centre and fully resourced, standalone global commodity businesses. The role of the corporate centre is well defined, to minimise bureaucracy and rational risk-taking is sponsored to stimulate innovation. We believe this model is a significant competitive advantage and enables Xstrata to be more opportunistic, and less bureaucratic than other companies of a similar scale and geographic reach.

Financial position

We are committed to maintaining a robust balance sheet and investment grade credit rating, ensuring access to a diverse range of funding sources. The ability to withstand periods of low commodity prices and to fund growth in a cost effective and timely manner, when appropriate, is essential to enabling the Group to achieve its strategy.

Resource and reserve base

Xstrata benefits from a significant resource and reserve base across each of its major commodities. The Group’s focus on value creation and near-mine exploration has enabled us to extend or replace the resource base of a significant number of our assets over the past several years. Xstrata’s resource base compares favourably with mining industry peers. The Group reserve and resource statement is published annually and is available from the Xstrata website.

Technological expertise

Xstrata benefits from a significant depth of technological and technical expertise which is critical for improving the efficiency of Xstrata’s operations and for major project development. Xstrata Technology Services comprises Xstrata Technology and Xstrata Process Support. In addition, Xstrata’s commodity businesses also develop and implement proprietary technologies to improve efficiency.

Exploration capability

Xstrata does not maintain a central or standalone exploration function. Xstrata’s commodity businesses are responsible for undertaking ‘near-mine’ exploration around existing operations or in nearby regions, leveraging existing infrastructure and conducting targeted greenfield exploration at known deposits.

Relationships with stakeholders

Xstrata is committed to the maximum transparency that is commercially possible and to engaging openly, honestly and in a culturally appropriate manner with its stakeholders. These include: the investment community, employees and unions, governments and regulators, communities associated with our operations, customers, suppliers, business partners, non-governmental and development organisations.