Ferrochrome and Vanadium
As announced on 20 October 2010, Xstrata Board has approved the second phase of the Lion smelter complex expansion and the associated Magareng mine development. The expansion will involve the construction and commissioning of a 360,000 tonnes per annum capacity smelter and will increase the Xstrata-Merafe chrome venture’s total ferrochrome capacity to over 2.3 million tonnes per annum at a capital cost of ZAR4.9 billion ($710 million). Bulk earthworks will commence in the first quarter of 2011 and commissioning is planned for the first half of 2013.
An agreement was concluded with Lonmin to increase and extend the current UG2 off-take agreement from tailings at Lonmin’s Marikana operations. The tailings will be treated through chromite recovery plants that will be built, owned and operated by the Xstrata-Merafe chrome venture. Total UG2 supply sourced through this deal agreement will amount to approximately 1.5 million tonnes per annum.
The Xstrata-Merafe chrome venture also approved the construction of a new 600,000 tonnes per annum pelletizing and sintering plant. Project Tswelopele will be constructed at a capital cost of $114 million at the Rustenburg plant and is expected to be fully operational in 2013. The plant will agglomerate some of the additional UG2 from the Lonmin operations, significantly improving operational efficiencies and costs and delivering environmental improvements.
The Horizon mine development remains on schedule to reach a production capacity of 40,000 tonnes per month by the end of 2013. Production at Waterval mine will start at the end of the first quarter of 2011, producing an average of 30,000 tonnes per month from available mineable panels.
Platinum Group Metals
Drilling the western decline, the Kukama Shaft,
at Eland platinum mine in South Africa.
At Eland, the development of the western decline, the Kukama Shaft, is progressing. Some challenges have been experienced due to poorer than expected ground conditions and initial production from the first mining level is expected during the first quarter of 2011. The development had reached 1,881 metres by December 2010.
During 2010, the Nyala Shaft, the $201 million eastern decline development at Eland, was approved and development commenced during April. A total of 1,456 metres had been developed by December 2010 and production from the first mining level is scheduled for the second quarter of 2011.
The underground operations will produce 250,000 tonnes per month by the end of 2013 and steady state production of 500,000 tonnes per month will be reached during the last quarter of 2015, doubling production levels to 300,000 platinum ounces per annum. Eland will have an estimated mine life of approximately 21 years (excluding the Madibeng reserves).
Xstrata Alloys continues to assess its medium to long-term PGM growth options through the development of its exploration portfolio with junior companies.
Exploration drilling at Beestkraal, scaled back during 2009 to preserve cash, will resume during 2011, with three boreholes of 2,000 metres planned for the year. To date, 10 boreholes and an aeromagnetic survey of the area have been completed.
On 30 November 2010, the South African Constitutional Court set aside Nkwe Platinum Ltds current exploration rights pertaining to the two southern farms, which do not form part of the current Garatau bankable feasibility study process. Nkwe are reviewing their options. The bankable feasibility study for the northern Garatau portion of the Nkwe and Genorah Resources Ltd project area, located on the Eastern Limb of the Bushveld Igneous Complex, was expected to be completed by the end of 2010, but has yet to be finalised and is currently being reviewed by the Nkwe Board. Xstrata Alloys anticipate completing their review by the end of the first quarter of 2011, following which Xstrata will decide whether to exercise the 50% participation option it has acquired.
