Xstrata is planning to invest more than $5bn (£3bn) in new projects as its focus shifts from acquisitions to organic growth.
The Anglo-Swiss miner said yesterday that it would spend $4.2bn developing the Las Bambas copper mine in Peru and a further $1.1bn on the Ulan West coal project in Western Australia. The Australian commitment comes after the Canberra government agreed last month to water down its proposed 40 per cent tax on the mining industry's profits, after pressure from groups including Xstrata.
The extra investment is part of a larger $14bn expenditure programme, covering 15 growth projects. The shift to organic growth comes almost a year after Xstrata was rebuffed in its hostile attempt to merge with Anglo American, after the Anglo chairman Sir John Parker convinced shareholders that the group was more valuable on its own.
"There's no interaction between the companies," Xstrata's finance director, Trevor Reid said yesterday. "It was, we believe, a compelling idea at the time, but it's not something that we're working on or spending any time on." Six months before its approach for Anglo, Xstrata was thwarted in its attempts to buy Lonmin, the London-listed platinum producer.
The increased investment came as Xstrata reported robust results for the first half of the year, with Ebitda up by 67 per cent, to $4.5bn.
The group, with its mining peers, has been helped by stronger commodity prices, however chief executive Mick Davis said that he was cautious about the short term economic outlook.
"The short-term outlook for macroeconomic conditions remains mixed, with a 'three-speed' global economy likely to persist for the foreseeable future," he said. "We remain very confident in the buoyant outlook for Xstrata's commodities in the medium term... the developing economies, led by China, Brazil and India, are set to continue to provide the main driver of demand growth for our products."