Xstrata, BHP, Anglo Approve $1.3 Billion Coal-Mine Expansion
Xstrata Plc (XTA), BHP Billiton Ltd. (BHP) and Anglo American Plc (AAL), partners in the world’s biggest open-pit coal mine for exports, approved a $1.3 billion expansion at the Colombian site to boost output as prices for the fuel rise.
The expansion will increase production by 8 million metric tons to 40 million tons annually, Xstrata, the world’s largest exporter of power-station coal, said today in an e-mailed statement. The companies, equal owners in the mine, will each spend $437 million to raise their share of output to 13.3 million tons a year from 10.7 million tons.
Demand for coal is rising as China and India, the world’s fastest-growing major economies, produce more electricity and steel, prompting companies to increase output as prices trade near records. Energy coal may average about $130 a ton this year, up from $98 a ton last year, Morgan Stanley said July 26.
Construction of the Cerrejon expansion in Colombia will be completed by 2013 and the mine will reach its new capacity by 2015, the companies said in separate statements.
Bumi Plc, owner of stakes in Indonesia’s biggest coal assets, yesterday said prices will “remain strong over the short and medium term,” citing higher demand from Asia and Europe.
Glencore International Plc, the largest listed commodities trader, said in May it planned to spend $2.6 billion expanding its Prodeco power-station coal operation in Colombia. Output will climb to 19.9 million tons a year in 2013 from 10 million tons last year, it said.
BHP, the world’s biggest mining company, declined 6.5 percent to close at 1,890 pence in London trading, the largest drop in more than 15 months. Xstrata dropped 10 percent, the most in more than two years, and Anglo American fell 7 percent,the most since March 2009. The U.K.’s benchmark FTSE 100 index slid 4.5 percent, the most since March 2009, amid renewed concern global growth is slowing.
To contact the reporters on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net; Jesse Riseborough in London at jriseborough@bloomberg.net.
To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net.
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