Xstrata PLC

Xstrata PLC

An international and diversified mining group, Xstrata PLC is listed on the London Stock Exchange and the SWX Swiss Exchange. Xstrata PLC is headquartered in Zug in Switzerland and is now also part of the FTSE 100 Index. Being a truly global group, it has operations and projects spanning eighteen countries and employs 56 000 people and employees. Its businesses stretch into over seven major commodity groups, these are: copper; coking coal; thermal coal; ferrochrome; nickel; vanadium and zinc. Some of their businesses are also in the platinum group metals, gold, lead, silver and cobalt industries.

How Xstrata PLC Started

Xstrata PLC started trading as Sudelektra AG in 1926, a Swiss company with investments in infrastructure and electricity projects in Latin America. The group renamed itself Xstrata after a series of acquisitions and disposals, transforming the company into a diversified natural resources group.

Xstrata PLC from 1999 onwards

After renaming itself, Xstrata AG continued to dispose of non-core businesses (aluminium, oil and gas) so that they could focus on low-cost production in its own key markets. It then acquired a Spanish-listed zinc group called Asturiana de Zinc in May 2001.

Listing on the London Stock Exchange

By 2001, Xstrata was still a small Swiss-listed mining company with a market capitalisation of $500 million. It was, at this stage, still very reliant on zinc and ferroalloys operations in Europe and South Africa.

In October 2001, the management team took over:

• The Chief Executive Officer appointed was Mick Davis who was formerly the Chief Financial Officer of Biliton and was the architect of the BHP Billiton merger.
• Trevor Reid was also then appointed as Chief Financial Officer. He was the Global Head of Resource Banking from the Standard Bank in London.

Five months later, Xstrata PLC was created in March 2002 through an initial public offering on the London Stock Exchange. This raised just under £1 billion and was oversubscribed over seven times at the offer price. At the same time, Xstrata became the world’s largest thermal coal exporter as it acquired Glencore’s coal assets, Enex and Duiker, in Australia and South Africa for $2.5 billion. These acquisitions made Xstrata PLC the 100th largest company as they entered the FTSE 100.

Key Events for Xstrata PLC in 2003

January 2003 saw Xstrata purchase the German Nordenham zinc smelter for $100 million from Metaleurop. The acquisition of the Australian metals and mining group, MIM Holdings, for $2.9 billion followed in June. This acquisition provided Xstrata an entry into two new commodities – copper and coking coal.

Then Xstrata PLC approved the construction of a new ferrochrome smelter in South Africa in December. The “Lion Project” has raised the group’s annual ferrochrome production capacity to one third of the current global capacity.

Xstrata PLC in 2004 and 2005

Xstrata approved the Rolleston project in February which created a long-life and open-cut thermal coal mine in Queensland in Australia. The group also introduced sustainable black empowerment participation in their own South African ferrochrome business by establishing a shared venture with SA Chrome and Alloys in the same month.

Xstrata PLC then increased its stake in the Queensland-based coking coal mine Cook Colliery to 95% by purchasing an extra 45% for US$18.8 billion in April.

August 2005 saw Xstrata purchase 19.9% of Falconbridge Ltd, acquiring the remaining 80% later in October – a total cost of $18.8 billion. This presented the group with a unique portfolio of organic growth opportunities:

• Exposure to North America;
• Additional scale for the zinc business – which is now the largest listed global producer;
• Diversification into nickel and
• A significantly enhanced copper business in South America.

Onto 2006

Xstrata PLC acquired a one third stake in Cerrejon, a Colombian coal operation from Glencore International for $1.7 billion in March. The group then bought the Peruvian Tintaya copper operation for $811 million from BHP Billiton in June.

The Key Event for the Group in 2007

Xstrata Aluminium (formerly created from Falconbridge Group’s aluminium assets) was disposed off to Apollo Management LP for $1.15 billion.

Company Credit Report for Xstrata PLC

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