Expansion in South America: Progress and Sustainable DevelopmentProgress and Sustainable Development
Jose Marún – Executive General ManagerS h A i O i Di i iSouth America Operations Division4 October 2012
South America Operations DivisionMaximising regional synergies
• Created in February 2011, headquartered in Lima Peruin Lima, Peru
• Manages mining operations, corporate affairs and business development in Argentina, Chile and Peru:
- Tintaya Antapaccay (Peru)
- Las Bambas (Peru)
- Lomas Bayas (Chile)y ( )
- Minera Alumbrera (Argentina)
- Agua Rica Project (Argentina)
- El Pachón Project (Argentina)El Pachón Project (Argentina)
• Strong regional coordination
• Synergy capitalisation eg suppliers and procurement
2
p
• Effective coordination with regional JV, marketing and project development sites
South America’s contributionMajor and growing contribution
• South American operations (including non-managed JV’s) contribute around 70% of Xstrata Copper’s production and operating profit pp p p g p
• Two major projects approved and in implementation: Tintaya/Antapaccay –commissioning and Las Bambas – under construction
• Several brownfield expansion opportunities at managed operations: Lomas Sulphides, C h A Ri
Xstrata Copper operating profit 2011: $3,924 million
Xstrata Copper mined copper production2011: 889,000 tonnes
C d
Coroccohuayco, Agua Rica
North Queensland
22%
Canada 11%
North Queensland
28%
Canada5%
Argentina 14%
Chile†28%
Argentina
Chile*31%
14%
Peru** 25%
g13%Peru** 23%
*Including Lomas Bayas and XCu’s share of Collahuasi**Including Tintaya-Antapaccay, Las Bambas and XCu’s share of Antamina†Including Lomas Bayas, Altonorte and Xcu’s share of Collahuasi 3
Strong Sustainable Development practicesSouth American Operations Division
• All operations and projects managed to Xstrata’s industry-leading sustainability standards, with strong focus on community engagementstrong focus on community engagement
– Regular internal and third party audits
• Continuous improvement in safety performance: Visible leadership, safe work procedures, effective investigations, training and risk management systems
• Industry-leading environmental performance: No moderate or more serious environmentalincidents; biodiversity programs; energy and water use efficiency targets
• Commitment to sustainability underpins business strategy and social licence to operate
– Early community consultation, effective dialogue mechanisms and grievance procedures
Lost Time Injury Frequency Rate Total Recordable Injury Frequency Rate2,00 3 00
0 50
1,00
1,50
2,00
1,00
2,00
3,00
4
0,00
0,50
2005 2006 2007 2008 2009 2010 20110,00
,00
2006 2007 2008 2009 2010 2011
Operations and Operations and Projects in ChileProjects in Chile
Chile: Lomas Bayas
• Lomas Bayas is located in the Atacama Desert 135 km northeast of the port of
Expanding production and extending mine life
Desert, 135 km northeast of the port of Antofagasta
• Employs approximately 1,700 people, including permanent contractors
• Annual production capacity: 75,000 tonnes of copper cathodes from a SX-EW plant
• Annual extraction rate: 70 million tonnes of i d f i i
Lomas Bayas supervisors at Fortuna pitmined ore from an open pit mine
• Lomas II project to extend mine life at current production is on track for completion in the fourth quarter of 2012p q
• Pre-feasibility study underway into the development of the sulphide deposit under and around the initial Lomas Bayas pit to further increase life and expand pit to further increase life and expand production
Vinko Yutronic Process Area Shift Boss
6
Focus on Sustainable Development
350
40030• Received the national annual Category A safety
prize from Sernageomin for safety performance i 2011
Recognised for industry-leading performance
Lomas Bayas safety performanceLTIFR / TRIFR DISR
150
200
250
300
350
10
15
20
25in 2011
• Industry-leading environmental performance: eg initiatives to reduce water loss in leaching process due to evaporation
0
50
100
0
5
10
2006 2007 2008 2009 2010 2011
LTIFR TRIFR DISR
– Leach pads’ sprinkler system replaced with drip feed system and pads covered when irrigated
– Reduced evaporation rate by approximately LTIFR TRIFR DISRReduced evaporation rate by approximately 54%
– Increased area irrigated by almost 70% without placing additional stress on local water resources water resources
• Best in class community relations
− Stakeholder dialogue roundtables
– Working with farmers, CONAF and University
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g yArturo Prat to conserve the Calama Oasis
– Multiple industry recognitions Supporting farmers to improve agricultural techniques
Creating value at Lomas BayasRapid value creation over six years
Since 2006, we have expanded the operation by 15% to 75ktpa, extended the mine life by16 years to 2028 and are evaluating a Sulphides project to further extend/expand the mine
Project delivery timeline
Acquire Lomas Bayas as part of Falconbridge acquisition
Expansion to 75ktpa completed in Q4 on time
Basic engineering of Lomas II project
Detailed engineering of Lomas II commences
Aug: Lomas II project 92% complete
2006 2007 2008 2012201120102009
Q4 on time and budget
project commences
commences
Procurement
June: $70m investment approved to expand Lomas Bayas by 15% to 75k
Oct: $293M Lomas II investment approved to extend mine life b 8 Q h l
Construction completed of Lomas II ROM system
C d
Lomas Bayas mine life extended by further 4 years to 2028
Lomas Bayas mine life extended by further 4 years to 2024
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75ktpa by 8 years to 2020 through development of satellite Fortuna de Cobre pit
Q4: mechanical completion:Heap LeachConveyor systemPrimary Crusher
Commenced Pre-feasibility study for Lomas Sulphides
Lomas Bayas II Project, ChileOn schedule for completion Q4 2012
Description
l f h h
Primary Crusher location – heap system
• Extension to Lomas Bayas mine life through development of Fortuna del Cobre orebody, 3km from the original pit
• Production: 75ktpa Cu using existing SX-EW p g gplant
• Approved capital cost: $293M
• LOM: extended by 16 years to 2028
Project Status (as of Sept 2012)
• Commissioned ROM system: Q4 2011
• Production ROM system: Q1 2012
Fortuna pit and ROM Pad – ROM system
• Commissioning heap leach system: Q3 2012
• Production heap leach: Q4 2012
• Primary crusher and conveying system:
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mechanical completion Q4 2012
Lomas Bayas II ProjectElectro Mechanical Assembly Belts and Crusher
Assembly of primary crusherCounterweight structure for overland conveyor
Construction of overland conveyor 10
Lomas Bayas II ProjectHeap leach pad construction
11
Lomas Bayas Sulphides Project
• Sulphide & oxide resource surrounding and beneath the Lomas Bayas open pit in
Evaluating further growth potential
a d be eat t e o as ayas ope p t Antofagasta Region, Chile
• Lomas Bayas Mineral Resource:
− 430 Mt @ 0.28% Cu in Oxides and Mixed ores
− 880Mt @ 0.33% Cu in sulphides and oxides
Lomas Bayas open pit• Estimated additional production capacity:
average of 90ktpa copper in concentrates over at least 18 years
• In pre-feasibility: potential start-up 2017
y p p
In pre feasibility: potential start up 2017
• Scope considers using standard concentrator concept (one line, 90ktpd)
• Project considers the use of sea water for
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jprocessing
Standard concentrator concept
Lomas Bayas Sulphides ProjectMine area plan
SULPHIDES DUMP
PUBLIC ROAD
ROMPADS
HEAP
NEW ACCESSCRUSHERSULPHIDE
CONVEYOR BELTS
CHECKPOINT
SULPHIDES PIT(existing Lomas I pit)
FORTUNA DUMP
HEAP LEACH
CONVEYOR BELTS
OXIDE CRUSHER
MANAGEMENT AREA YARDS- SERVICES
FORTUNA PIT
CONCENTRATORROM PADS
OXIDE CRUSHER
ELECTRICAL
SULPHIDES BELTS
CAMPTRUCK SHOP
ROM PADSFORTUNA
LINES (SING)
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ti dOperations and Projects in jArgentinaArgentina
Argentina: Bajo de la Alumbrera MineLarge scale, low cost operation
• Ownership: Xstrata Copper 50% and manager, Goldcorp 37.5%; and Yamana Gold g , p ;12.5%
• Located in Catamarca province at 2,600 metres above sea level
• 317km concentrate pipeline to Tucumán then rail to port facilities in Santa Fe province.
• Annual production of 135,000 tonnes of copper in concentrates; 350 000 ounces of
Transporting ore to the primary crushercopper in concentrates; 350,000 ounces of gold in concentrates; 25,000 ounces of gold doré; and 1,400 tonnes of molybdenum concentrate
L fi il C1 h i i• Low first quartile C1 cash cost position
• Mine life to 2018 through successive mine life extensions over recent years.
Alumbrera concentrator
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Minera Alumbrera: Sustainable DevelopmentperformanceCommitted to continuous improvement
• Strong safety performanceMinera Alumbrera safety performance
• Industry–leading environmental management:
– Over 928 days without any Category 2 (minor) or more serious environmental (minor) or more serious environmental incidents
– Effective biodiversity management program
– Meeting water use improvement targets
• Effective community relations programs
– Community surveys indicate improving perception of mining benefits
– Delivery of a number of major infrastructure projects eg Schools and
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infrastructure projects eg. Schools and Hospital in Catamarca and Tucumán maternity hospital
Monitoring Alumbrera’s cacti revegetation program
Agua Rica ProjectPotential to extend life and expand Minera Alumbrera
• Minera Alumbrera holds the option to develop the Agua Rica project 35km from develop the Agua Rica project, 35km from the Alumbrera processing facilities
• Mineral Resource: 1.7 billion tonnes @ 0.4% Cu with Mo and Au credits (0.20% Cu Cut-off)
− Mineral Resource confirmation program underway
F ibili d (Fl /XC ) i l i Drill program• Feasibility study (Fluor/XCu) is evaluating
Agua Rica development as a brownfield expansion to Minera Alumbrera, utilising the existing concentrator and mine fleet
p g
• Estimated production capacity 250ktpa Cu with gold and substantial Moly credits, mine life of over 25 years
• If option / investment decision is made • If option / investment decision is made, there is potential transition from MineraAlumbrera to Agua Rica in 2018-2019 Preliminary design – Crusher platform
17
El Pachón Project
• Located in San Juan Province, Argentina 5km from border with
Recent history of substantial Mineral Resource improvements
El Pachón Mineral Resource Evolution by Category & Year
ktonnesArgentina, 5km from border with Chile
• Mineral Resources: substantial ongoing increases achieved
2 500
3.000
3.500ktonnes
– 2010-2011 increase achieved through major drilling program (56,000m)
– 2011-12 increase achieved via 869
1.556
1.700
1.500
2.000
2.500Inferred Indicated
Measured
– 2011-12 increase achieved via key geometallurgical & geomechanical optimization & minor drill program
C l i fi l f ibili d 193 197434 530
686 612620 690
8081.050
299
574869
500
1.000
• Completing final feasibility study
– Very low Waste:Ore stripping ratio of 0.2:1
– Mine life of 30 years
El Pachón Total Mineral Resources (Oct 12):
3 280 illi t t d f 0 47%
36 69 193 19702003 2007 2009 2010 2011 jul-12Jun‐12
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Mine life of 30 years
– Initial production of more than 400ktpa Cu with Mo credits
3,280 million tonnes at a grade of 0.47% copper, 0.011% molybdenum and 2.1 ppm silver using a cut-off grade of 0.2% copper
O ti d Operations and Projects jin Peruin Peru
Operations in Peru
• Acquired Las Bambas project in Apurimac Region in 2004
– Construction underway for 400ktpa operation to
Rapid development and growth
y p pcommence commissioning end-2014
• Acquired Tintaya in Cusco Region in 2006
– Nearby Antapaccay project commenced p pcommissioning in August – first concentrate production scheduled for October
– Capitalising on synergies Tintaya/Antapaccay/Bambas
d 33 % k h• Acquired 33.75% stake in Antamina in Ancash Region in 2006 via Falconbridge acquisition
– Major expansion to increase throughput by 38% successfully completed in Q1 2012success u y co p eted 0
• Since 2004, Xstrata has committed investment of US$10 billion in Peru (including Antamina) and employs 16,500 people including contractors
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• We have contributed US$1.44 billion in social funds/projects, taxes and royalties over same period
Industry-leading community engagementStrong focus on gaining licence to operate
• Commenced community engagement at Las Bambas before exploration programp p g
• Established benchmark Independent Advisory Group at Las Bambas
• Overwhelming community support during P bli C lt ti L B b d Public Consultation on Las Bambas and Antapaccay EIAs
• Effective social programs at all sites providing shared value Award-winning dairy plant in Espinar
• Dialogue Tables with communities in Espinar District since 2002 (renamed Development Table)
• Espinar Province “Dialogue Table” with
funded by Tintaya
• Espinar Province Dialogue Table with national / local authorities and community representatives established July 2012− Participatory environmental monitoring
d
21
underway• Strong environmental management
TRIFR = 0.30Tintaya’s safety performance
Tintaya-AntapaccayDelivering sustainable benefits
Tintaya-AntapaccayDelivering sustainable benefits
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Creating value at Tintaya-AntapaccayRapid value creation over six years
Since acquiring Tintaya in 2006 for $750M, we have delivered $2.5bn in EBITDA, identified over1.3bn tonnes of near-mine mineral resources and constructed the major Antapaccay projectj p y p j
Project delivery timeline
Acquisition of Tintaya for $750M, including Antapaccay and Coroccohuayco and other
Antapaccay feasibility study commences
Antapaccay EIS completed
Antapaccay EIS approved Xstrata board approvalConstruction starts
H2 2012 Antapaccay commissioning
2006 2007 2008 2012201120102009
Coroccohuayco and other prospective targets
commences
Initial mineral resource472Mt @ 0.74%Cut-off grade 0.4%
10% resource increase520Mt @ 0.72%Cut-off grade 0.3%
32% resource increase720Mt @ 0.56%Cut-off grade 0.2%
13% resource increase817Mt @ 0.56%Cut-off grade 0.2%
26% resource increase1,030Mt @ 0.49%Cut-off grade 0.15%
h C h
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CoroccohuaycoInitial mineral resource90Mt @ 3.10%Cut-off grade 1.5%
Coroccohuayco250% resource increase324Mt @ 0.93%Cut-off grade 0.3%
CoroccohuaycoPre-feasibility study commences
Tintaya Antapaccay
• Mining operations progressively transferring from Tintaya open pit where mining
Mining transitions from Tintaya to Antapaccay project
Model of Antapaccay open pitsfrom Tintaya open pit, where mining operations will end in Q1 2013, to Antapaccay Project
• Antapaccay will extend Tintaya operations by h 20 d d
Antapaccay Norte1.2 Km
1.4 Km
more than 20 years and increase production from approximately 100ktpa of copper to 160ktpa
• Two open pits: Antapaccay Norte and 1.6 Km
Antapaccay Sur
p p p yAntapaccay Sur
• Mining operations commenced in March 2012 at Antapaccay
O d i d i A il 2012 • Ore production commenced in April 2012
• Annual mining rate: 110Mt
• Strip ratio: 2.8
Fl t i 4 Sh l 6 L d & 30 Gi t
1.8 Km
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• Fleet size: 4 Shovels, 6 Loaders & 30 Giant Trucks
Coroccohuayco ProjectPotential Tintaya-Antapaccay brownfield expansion
• Located 10km southeast of Tintaya-Antapaccay in Espinar Province, Cusco Region, Peru
• Obvious synergies in district• Obvious synergies in district
• Mineral Resource: 324Mt @ 0.93% Cu using a 0.3% Cu cut-off (Dec 11)
• Estimated production capacity: average of 50ktpa copper-in-concentrate from an open pit minep
• Pre-feasibility study underway
• Further district development potential
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Las BambasCreating mutual benefit
Las BambasCreating mutual benefit
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Las Bambas ProjectMajor new world-class mine
• Major new, world-class, long life mining complex (initially 3 mines) leveraging complex (initially 3 mines), leveraging synergies with Tintaya Antapaccay
− Copper production: 400ktpa for at least first five years; 315ktpa on
20average over ~20 years
− Molybdenum production: 5ktpa
• World-class Mineral Resource: 1.71 Billion tonnes @ 0 61% Cu with Au and Mo Offices camp - August 2012tonnes @ 0.61% Cu with Au and Mo credits, providing brownfield expansion opportunities
• Substantial further district exploration i l
Offices camp August 2012
potential
• Construction of Nueva Fuerabambatownship commenced H1 2011
• Full project construction commenced H1
Earthworks at Primary Crusher - August 201227
Full project construction commenced H1 2012
• Commissioning targeted H2 2014
Nueva FuerabambaBuilding a new town for the Fuerabamba community
• Resettlement plan presented to Fuerabamba community and authorities in Nov 2008
• Formal resettlement agreement signed with community leaders on 29 December 2009
– Authorities provided training and support to community to assist negotiations
• Community endorsed agreement in February 2010
• Land exchange contract signed in 2011
• Agreement includes initiatives on education, capacity building, health, sanitation, landreplacement, agriculture, livestock breeding, local economic development, economicinfrastructure employment natural resources and vulnerable groupsinfrastructure, employment, natural resources and vulnerable groups
Nueva Fuerabamba town Model of Nueva Fuerabamba home
Conclusions
• Sustainable Development excellence and continuous improvements demonstratedacross all operationsacross all operations
• Successful optimisation of operations across three South American countries
• History of value-enhancing brownfields growth
F h i ifi b fi ld h i l b i l d ll i• Further significant brownfield growth potential being evaluated at all operations
• Support for El Pachón mega project evaluation
Alumbrera flotation plant Lomas Bayas pitTintaya SX-EW plant
Questions?Questions?
