By Robb M. Stewart
MELBOURNE--Xstrata PLC (XTA.LN) has raised its estimate for the
initial cost of a planned copper-and-gold mine in Papua New Guinea,
partly reflecting U.S. dollar depreciation in recent years which
has lifted mining costs, its minority partner in the project said
Monday.
The initial cost will be US$300 million higher than had been
estimated in 2010 at US$5.6 billion, Australia's Highland Pacific
Ltd. (HIG.AU) said in a stock exchange statement.
It said the two companies had identified the potential to reduce
the initial capital investment in the Frieda River project to about
US$5 billion through changes to waste disposal at the mine.
A just-released feasibility study by Xstrata also has
recommended tapping Papua New Guinea's natural-gas reserves rather
than using hydro-electric power for the planned mine, Highland
Pacific said.
Xstrata, which has an 81.8% stake in Frieda River, envisages an
open-pit mine capable of producing an average of 304,000 metric
tons of copper a year and 451,000 ounces of gold annually in the
first five years of a 20-year operation.
It has estimated an average cost of US$1.11 a pound of copper
over the lifetime of the mine.
Highland Pacific said a final investment decision would depend
on the government of Papua New Guinea's proposed involvement in the
project, further work on mining plans, the renewal of exploration
licenses due in May and November, and further discussion on
necessary environmental and regulatory approvals.
Write to Robb M. Stewart at robb.stewart@wsj.com
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