Bonao, Dominican Republic, 12 October 2010

 Xstrata Nickel’s Falcondo ferronickel complex (Falconbridge Dominicana, S. A.), a nickel mining and processing operation in the Dominican Republic, is restarting operations to a planned 50% of installed capacity by March 2011. Falcondo’s restart takes advantage of improved market conditions, optimization of mining and production plant processes, and the signing of a commercial agreement with local power company AES Dominicana for the supply of electricity, which will enable Falcondo to operate with reduced costs.

 Prior to being suspended in response to the global economic downturn in August 2008, Falcondo formerly used oil as its primary energy source.  In order to reduce costs and enable a more timely restart of operations, Falcondo is being converted to use procured electricity and will continue to use naphtha for metallurgical reduction.  The project to convert the long-term energy source for Falcondo’s process plant from oil to natural gas to enable the operation to reach 100% production capacity will continue in conjunction with the resumption of operations.

 Falcondo will begin restart activities immediately, including the recruitment of qualified personnel, continued plant maintenance and preparation for mining operations.  Production is expected to ramp up to 50% capacity, or approximately 14,000 tonnes per annum of nickel in ferronickel, by March 2011.

“Falcondo’s approach to recommence operations at 50% capacity was identified as the best path forward to deliver the maximum value possible at this time with minimum capital outlay,” said Ian Pearce, Chief Executive Officer, Xstrata Nickel. “The work done by the Falcondo team during the care and maintenance period to become a more efficient operation has enabled this low-cost option.”

 Since being placed on care and maintenance in August 2008, Falcondo supported the Dominican Republic by providing an ongoing supply of electricity and through increased contributions to the Falcondo Foundation’s numerous social responsibility programmes. Mine rehabilitation and reforestation activities also continued throughout the shutdown period.

Ends

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Editors Notes

Xstrata plc

Xstrata is a global diversified mining group, listed on the London and Swiss Stock Exchanges.  Headquartered in Zug, Switzerland, Xstrata maintains a meaningful position in seven major international commodity markets: copper, coking coal, thermal coal, ferrochrome, nickel, vanadium and zinc, with a growing platinum group metals business, additional exposures to gold, cobalt, lead and silver, recycling facilities and a suite of global technology products, many of which are industry leaders. The Group's operations and projects span 19 countries.

 Xstrata Nickel

Xstrata Nickel, headquartered in Toronto, Canada, is one of Xstrata Group’s global commodity businesses. Xstrata Nickel’s operations include mines and processing facilities in Canada, the Dominican Republic and Australia, and a refinery in Norway. Xstrata Nickel has a promising portfolio of growth projects in New Caledonia, Tanzania and Brazil. Xstrata Nickel is the world’s fifth largest nickel producer, with annual managed production of 88,000 tonnes of refined nickel.

Falcondo
Falcondo is a surface mining operation that has the capacity to produce 29,000 tonnes of nickel contained in ferronickel annually. Ferronickel is a combination of iron and nickel used almost exclusively by the stainless steel industry. The property is situated in the Dominican Republic, in the town of Bonao, 80 kilometres north of Santo Domingo. The facilities include a metallurgical treatment plant, a crude oil refinery and a 200 megawatt thermal power plant. Xstrata owns 85.26% of the outstanding shares of Falcondo.

 The Falcondo Foundation, established in1989, is a non-profit foundation designed to encourage development in the areas of health, education, environment and culture.  The Falcondo Foundation also enables area residents to plan and carry out development activities by supporting projects related to the preservation and management of natural resources.  Since inception, the Foundation has donated approximately US$12 million, reforested more than 500 hectares of land, and complemented the efforts of the Dominican government to improve education by supporting approximately 78,000 students.  In 2005, Falcondo received recognition from the Organization of States of America, as one of the “corporate citizens of the Americas” for its community initiatives.