Xstrata gives green light to McArthur River mine expansion

Xstrata has approved a US$ 360 million expansion for its McArthur River zinc mine in the Northern Territory.

The approval for Phase 3 of its expansion plans will see the mine double capacity at its operation from 2.5 million tonnes of ore to 5.5 million tonnes annually from 2014.

"The project will increase annual zinc production to 380 000 tonnes and lead production to 93 000 tonnes," the miner says.

Additional processing technology will also allow it to produce a separate zinc concentrate for the first time.

Santiago Zaldumbide, Xstrata's zinc chief executive, said the expansion will service the mine's position as one of the world's premier zinc operations.

"When we acquired the McArthur River Mine in 2003 as part of our Mount Isa Mines acquisition, Xstrata inherited an uneconomic asset with an estimated mine life of less than five years, rising costs and an underground operation that could only exploit two of the eight available ore bodies," Zaldumbide explained.

"Following our conversion of the operation into a 2.5mtpa open cut mine with a 15 year life in 2010 to open up access to MRM’s vast resource, the Phase 3 project will enable us to unlock fully its potential.

"The next phase of McArthur River’s development will complete our transformation of a failing and unprofitable operation nine years ago into a world class, low cost, large scale and long life open cut mine."

The announcement is good timing for Xstrata, as the mine will begin increased output as the world is predicted to suffer a deficit in zinc levels.

MRM is now awaiting approvals from the Northern Territory minister for resources prior to beginning construction.

"We expect the MRM Phase 3 Development Project to generate a 67% increase in jobs on site to 735 positions by 2020, sustain a high level of indigenous workforce participation (currently 23%) and boost industry output by AUD8.4 billion within the Northern Territory economy and $9.3 billion nationally over the life of mine," Xstrata Zinc Australia COO Brian Hearne said.

The expansion will double the depth down from 210 metres to 420 metres.

This latest announcement comes on the back of Xstrata breaking ground at its Mount Margaret operation.

The mine is made up of the E1 and Monakoff copper tenements Xstrata acquired from Exco Resources last year.

At the time Xstrata said production from these deposits would make an “incremental contribution” to Ernest Henry’s production profile from the second half of 2012.

Ore mined from the $124 million project will be processed through Xstrata's existing Ernest Henry concentrator, with first ore production expected by the end of August.

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