Xstrata expands zinc amid Kagara demise

Xstrata has announced plans to increase zinc production five percent by accelerating production at the Lady Loretta mine and extending the life of its Handlebar Hill site.

Xstrata said it was spending $57 million to accelerate the development of the Lay Loretta site near Mount Isa.

The mine was slated to start production by the end of 2013 at a rate of one million tonnes per annum, but the investment means mining will now start by late 2012 at a rate of 1.2Mt.

Xstrata said the expansions at its Handlebar Hill operation would also allow it to mine "previously marginal ore".

The company's decision to expand its zinc operations comes amid zinc focused miner Kagara's move into voluntary administration.

Kagara previously blamed low zinc prices as a major contributor to its demise.

Xstrata had no comment on the zinc market or Kagara's business this morning.

In an investor seminar in December Xsrtata Zinc said it expected "robust growth in zinc demand" on the back of China's growing urbanisation.

"Zinc supply and demand fundamentals remain attractive in the medium-long term," it said.

Image: Lady Loretta mine

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