XSTRATA SELLS 20% INTEREST IN QUEENSLAND COAL BUSINESSES AND 25% INTEREST IN QUEENSLAND COAL PROJECTS

Zug, 17 September 2003

Xstrata plc ("Xstrata") announces that agreement has been concluded to sell, as a package, a 20% interest in the Newlands, Collinsville, Abbot Point (NCA) Joint Venture, a 20% interest in the Oaky Creek Coal (OCC) Joint Venture and a 25% interest in four Xstrata Coal Queensland projects in equal portions to current Joint Venture partners Itochu Corporation (Itochu) and Sumitomo Corporation (Sumitomo). The transaction purchase price of AUD555 million (US$370 million) represents a surplus, estimated to be approximately US$85 million, over the fair value allocation of the MIM coal business at the time of acquisition. It is expected that up to US$70 million of this will be booked to Xstrata's Profit and Loss account in 2003.

AUD49 million (US$32.6 million) of the total purchase consideration will be deferred until Xstrata approves the full development of the Rolleston project. A decision is expected early next year.

Following the transaction Xstrata Coal will retain the majority interest and the management rights in each of the Joint Ventures, with a 55% interest in the NCA and OCC Joint Ventures respectively and a 75% interest in the Rolleston, Wandoan, Red Rock and Pentland projects ("The Projects"). New Joint Ventures are to be established for the Projects.

Xstrata Chief Executive Mick Davis said, "This transaction represents an opportunity for Xstrata to realise significant value, while maintaining an excellent balance of exposures, particularly between bulk traded and terminal market/LME commodities. The decision to sell is a direct consequence of this management team's focus on securing value rather than size or production growth. Following the successful integration of the MIM and Xstrata businesses, and with realisation of associated cost synergies well underway, this transaction further enhances Xstrata's financial position, enabling the Group to take advantage of other investment opportunities."

Mr Peter Coates, Chief Executive Xstrata Coal, said, "We are delighted to be able to extend our existing relationship with both Sumitomo and Itochu and look forward to working together with them in further developing this excellent suite of assets. We appreciate their vote of confidence in both the assets and our partnership. Importantly, a broader relationship with these two major Japanese corporations will assist us in further accessing the Japanese coal market."

The completion of the transaction is expected to occur by year-end.

ends

Xstrata contacts

Marc Gonsalves
Telephone +44 20 7968 2812
Mobile +44 7775 662 348
Email mgonsalves@Xstrata.com

Justine Winn
Telephone +61 2 9253 6748
Mobile +61 416 196 403
Email jwinn@xstratacoal.com

Brigitte Mattenberger
Telephone +41 41 726 6071
Mobile +41 793 811 823
Email bmattenberger@Xstrata.com

Email Michael Oke & Claire Bithell
Prospero Financial
Telephone +44 20 7898 9394/9387
Mobile +44 7778 469630/07796 278 294

Notes

Composition of Joint Ventures following completion of the transaction:

OCC Joint Venture
o 55% interest – Xstrata Coal (previously 75%)
o 25% interest – Sumitomo (previously 15%)
o 20% interest – Itochu (previously 10%)

NCA Joint Venture
o 55% interest – Xstrata Coal (previously 75%)
o 10% interest – Sumitomo (previously 0%)
o 35% interest – Itochu (previously 25%)

Projects Joint Venture
o 75% interest – Xstrata Coal (previously 100%)
o 12.5% interest – Sumitomo (previously 0%)
o 12.5% interest – Itochu (previously 0%)