xstrata's economic contribution

Stacked copper anodes await refining at Xstrata Copper's Townsville refinery Stacked copper anodes await refining at Xstrata Copper's Townsville refinery

As a natural resources group, Xstrata's activities provide basic materials and energy for social and economic development. Our operations contribute towards the economic development and wealth of their host communities and countries in a number of ways, including:

  • wages paid to employees and contractors;
  • job creation through expansion of existing projects or new growth projects;
  • indirect job creation at surrounding communities and towns;
  • royalties and taxes paid to governments (national, state/provincial and local);
  • goods and services procured for our businesses; and
  • financial support for community development through Xstrata's corporate social involvement initiatives.
"Xstrata's direct foreign investment in the countries in which it operates since the Group's creation in 2002 amounts to some $7.2 billion."

Xstrata's direct foreign investment in the countries in which it operates since the Group's creation in 2002 amounts to some $7.2 billion.

Table of direct foreign investment

In 2004, Xstrata initiated a number of major internal growth projects which will make a significant additional economic contribution to their surrounding communities and host countries.

  • In Queensland, Australia, construction began on the new Rolleston open-cut thermal coal mine, which will begin production at the end of 2005. The mine will create long-term direct employment growth of around 150 jobs with an additional flow-on effect of 110 indirect jobs created in the region and significant additional employment during the construction phase. The new mine is expected to generate economic benefits equating to around AUD170 million for each year of the mine's life. Of this, some AUD20 million will be paid in royalties and around AUD15 million in wages. As part of the development of the mine, Xstrata Coal will spend approximately AUD1.8 million on a community funding programme agreed with the local council which will help to improve infrastructure and services for neighbouring communities.
  • Xstrata Copper acquired an option to develop the Las Bambas copper project in Southern Peru at a total initial cost of $91 million, including $45.5 million payable to a community trust. Xstrata's bid was selected by Proinversi¤n, Peru's Private Investment Promotion Agency.
  • At Xstrata's Mount Isa operations, 350 new jobs have been created and 1,000 secured since Xstrata took over control of the former MIM Holdings operations in mid-2003. The new Xstrata Zinc Black Star zinc-lead mine has created a further 150 jobs and represents a total investment of AUD27.6 million.
  • Phase one of Xstrata Alloys' new 360,000 tonne Lion ferrochrome project in South Africa will create around 600 permanent jobs and 200 fixed-term contracts. The project has further expansion potential.

Financial performance

In 2004, Xstrata's attributable profit (net earnings) increased by more than 560% to $1,088.4 million, bringing earnings per share to 174US¢ (pre-exceptional items), on the back of stronger commodity prices across all of our businesses. The Board declared a final dividend of 16US¢ per share, bringing the total dividend for 2004 to 24US¢, up 20% on the previous year (20US¢ per share).

Further detailed information on Xstrata's financial and operating performance is available in our Annual Report available from www.xstrata.com or as a hard copy on request.

In 2003, Xstrata acquired MIM Holdings Limited, a mining and metals group that doubled the Group's size. In 2004, production levels increased as a result of a transformation programme at the former MIM operations in Queensland and increased productivity and efficiency at a number of operations.

Table of financial performance
EBIT graphs by commodity EBIT graphs by geography

*Pre-exceptionals, excluding discontinued operations, other businesses and unallocated.

Transparency and openness

One of the four basic tenets of Xstrata's Business Principles is our commitment to transparency and openness. Xstrata is committed to the maximum transparency that is commercially possible in our business in order to deliver industry-leading returns to our shareholders.

Xstrata publicly supports the UK Government's Extractive Industries Transparency Initiative (EITI) to increase transparency over payments and revenues in the extractives sector in countries heavily dependent on these resources.

Table of taxes, royalties, employee payments and social involvement expenditure by geographical area 2004
Turnover graphs by geography Turnover graphs by commodity

*Includes share of Pooling and Sharing Venture, excludes discontinued operations, other businesses and unallocated.