Fostering Australian-Latin American Development Links: the Xstrata Copper experience - PDF

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Fostering Australian-Latin American Development Links: the Xstrata Copper experience Charlie Sartain, Chief Executive, Xstrata Copper 2 December 2010 Overview Xstrata Copper s operations Xstrata Copper
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Fostering Australian-Latin American Development Links: the Xstrata Copper experience Charlie Sartain, Chief Executive, Xstrata Copper 2 December 2010 Overview Xstrata Copper s operations Xstrata Copper s involvement in Latin America Synergies between Australia and Latin America Operations and Projects spanning both regions Percentage contribution to XCu s mined copper production 1H10 Canada 6% North Queensland 20% Alumbrera 17.6% North Chile* 35.0% Southern Peru** 21.5% South America 74% * Including XCu s share of Collahuasi ** Including XCu s share of Antamina Percentage contribution to XCu s 1H 2010 EBIT of US$1.4 billion Canada 6% North Queensland 12% Alumbrera 20.3% North Chile* 38.0% Southern Peru** 23.3% South America 82% * Including XCu s share of Collahuasi ** Including XCu s share of Antamina Significant brownfield and greenfield growth in the region Industry-leading portfolio of approved projects ($7billion) to increase copper production by ~50% to 1.5Mtpa by the end of 2014 Five brownfield project expansions: Lomas Bayas II, Ernest Henry underground, Antamina expansion, Collahuasi expansion and Tintaya/Antapaccay expansion One major greenfield project: Las Bambas Further development projects provide optionality with 1Mt potential additional annual copper production Xstrata Copper resources growth Mt equity copper contained in mineral resources Greenfield Projects Canada North Chile Southern Peru Minera Alumbrera North Queensland Xstrata Copper production growth profile kt mined copper Approved Greenfield Approved Brownfield Existing Production Approved and in Plan: Lomas Bayas II Ernest Henry u/g Antamina 130ktpd Collahuasi 160ktpd Antapaccay (B/F) Las Bambas (G/F) Future growth options: Collahuasi expansion (Conceptual studies) Tampakan (Completed feasibility) Frieda River (Feasibility commenced) El Pachon (Updating feasibility) Xstrata Copper s operations Xstrata Copper s involvement in Latin America Synergies between Australia and Latin America Actively promoting ties between Australia and South America Decentralised structure: Divisional head offices in all regions where we operate Corporate Affairs activities Strong links with national govts, local authorities and communities Corp Affairs offices in national capitals of Latam countries Asia-Pacific Economic Council leaders forum involvement Australian university students at Lomas Bayas Australian-Latin American Business Council (ALABC) Educational and training exchange initiatives Chilean exchange students at Mount Isa Mines Rescuing Chile s 33 miners A public-private rescue effort XCu participated both directly and through our JV Collahuasi operation. XCu organised and funded state of the art equipment to measure deviations in the drill holes that were searching for the trapped miners Collahuasi provided the Schramm T-130 drill rig and associated specialists who drilled the 26 inch hole through which the miners were rescued Supporting sustainable communities Xstrata Copper continues to be recognised for its contribution towards building sustainable communities Capacity building initiatives - examples: Chile: Established training programs to assist local suppliers improve their competitiveness and business management skills Southern Peru: Working with communities and education providers to deliver trade training for residents to increase employment and business development opportunities Argentina: Partnering with municipal governments and farmers groups to improve agriculture practices to increase sustainability, productivity and crop quality. Xstrata Copper s operations Xstrata Copper s involvement in Latin America Synergies between Australia and Latin America Australia and Latin America are both mineral resource heavyweights... In the top five producers for most of the key mineral commodities: Latin America: copper, gold, molybdenum, silver, bauxite, rhenium, nitrates, iron ore, zinc and lead Australia: bauxite, iron ore, uranium, zinc, metallurgical and thermal coal, gold, nickel, diamonds, silver, lead and copper Australia, Peru, Mexico, Chile and Brazil are in global top-ten countries for exploration expenditure Australia second largest destination on a country basis Latin America most popular destination for exploration spending since 1994 on a regional basis 53% of global copper mining prospects are in Latin America (Chile, Peru, Argentina and Mexico) ...and mineral resources have an important place in their economies Significant contributions in taxes, royalties and other fiscal revenues Contribution to GDP Important export products Higher wages on average than other industries Direct and indirect employment Driver for infrastructure development Mining's contribution 2009 Australia¹ Peru² Chile Argentina⁴ % of GDP 9% 11.6% 16.9%³ 4% Direct employment n/a Indirect employment Exports (US dollars) 108 billion 16.4 billion 30.5 billion 2.4 billion % of exports 49% 60% 57% 4.4% Key ¹ Minerals Council of Australia 2009/10 ² SNMPE, GDP expressed as current prices ³ Consejo Minero, GDP expressed as current prices ⁴ Secretary of Mines, indirect employment includes direct Mining is playing a key role in Latin America s development Mining developments and operations are generally located in remote districts that are developing socio-economically The mining industry can build a virtuous circle of investment, employment and sustainable growth based on mining activities Communities potential growth is focused on employment in the mining or mining-related industries, but also from the improved economic conditions that the presence of a mine will generate locally The modern mining industry is instrumental in implementing social programs that improve the quality of life of disadvantaged remote local communities and there will be further opportunities for Australian companies to contribute to this development APEC has transferred the international trade axis from the Atlantic in the last century to the Pacific Free trade and double taxation agreements will further stimulate trade Minerals and fuels represent an important part of total trade Mining investment of US$200 billion projected in Latin America over next decade (source Cesco): Brazil: US$57 billion Chile: US$50 billion Peru: US$40 billion Colombia: US$24 billion Mexico: US$21 billion Argentina: US$12 billion Conclusions Australia and Latin America are both continents that are rich in mineral resources and share a mining tradition Latin America currently represents only 1.7% of Australia s world trade in goods and services but APEC and increasing FTAs between Australia and LatAm countries will support more rapid growth and opportunities Mining products & services and fuels will continue to form an important part of this trade relationship Xstrata Copper projects - estimated investment of US$10 billion in LatAm over next five years The mining and allied industries provide the main growth opportunities in underdeveloped areas Companies with a strong Sustainable Development focus will be best equipped to provide this win-win outcome
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