Xstrata Coal Announces Rolleston 50,000 Tonne Sample Pit Will Proceed

Sydney, 17 September 2003

The Board of Xstrata plc has approved the immediate development of a further 50,000 tonne sample pit at Xstrata Coal's Rolleston project at a cost of some A$3.9 million. This follows the completion of a successful internal review to assess the project's technical and commercial feasibility.

Peter Coates, Chief Executive Xstrata Coal, said, "Our three month internal review confirmed the inherent attractiveness of the project based on its low cost structure and desirable product quality. I am therefore delighted the Xstrata Board has given the go ahead to progress to the next stage as this marks a significant milestone in the project's development.

"Xstrata Coal remains very positive about the development of Rolleston but is mindful that bringing a high capacity (8MTPA) thermal coal mine into the market must be done in a prudent fashion if the long-term future of the Australian coal industry is to be secured. The potential market impact of this volume of coal in the current climate of a strong Australian dollar and weak coal prices calls for careful market testing.

"The next stage of the development of Rolleston will therefore enable coal from the 50,000 tonne sample pit to be used in further market tests to secure additional key customers, while maintaining an ongoing review of thermal coal market dynamics. At the same time, several other key issues will be finalised including contractual arrangements for the transportation of the product coal and finalisation of cultural heritage requirements.

"Today's announcement reflects our long-term commitment to the Rolleston project and we look forward to continuing to work together with our project stakeholders going forward. The decision to proceed to the next stage in the Project's development will be taken once the additional market tests are completed, which we expect will occur early next year."

The Rolleston Project is capable of rapid development, with an estimated lead-in time of less than 24 months from project approval and estimated capital expenditure of some A$380 million (US$250 million).

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For further information:

Justine Winn
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