Xstrata wants to double zinc-lead output at McArthur mine
* Says $900 mln plan will require revamping smelters in Europe, Canada
* Demand for current McArthur concentrate in decline (Adds details, chief operating officer comments)
SYDNEY, March 11 (Reuters) - Global miner Xstrata said it must spend $900 million to double productivity at its McArthur River zinc and lead mine in Australia, as it tries to maintain the viability of one of the world's largest operations of its kind.
The plan involves an increase in mine production and also installation of proprietary hydrometallurgy technology at the company's San Juan de Nieva smelter in Spain and Nordenham smelter in Germany, and potentially improvements to its lead smelter in Brunswick, Canada, according to Xstrata.
Xstrata's Australia zinc division chief operating officer, Brian Hearne, said Xstrata was facing a decline in the traditional international markets for the unique bulk zinc-lead concentrate produced by the mine, prompting the changes.
At present, the material from the mine can only be processed at a falling number of smelters employing what's called Imperial technology, limiting marketing outlets, according to Hearne.
"They (Imperial smelters) have been dropping off for some time," Hearne said by telephone from Brisbane on Friday.
Zinc is widely used in steel galvanising, while lead is a key ingredient in auto batteries.
Hearne estimated that zinc and lead-bearing concentrate produces less than 6 percent of the world's primary zinc.
By changing the way the concentrate is smelted, the zinc and lead can be segregated, proving wider markets for the material.
"We've done fairly extensive work on this so far," Hearne said. "It's only by increasing production at MRM (Macarthur River) and reducing unit costs that the overall project is financially viable."
"We can increase smelter capacity and create a new, guaranteed market for MRM bulk concentrate and extend the life of mine by six years to 2033," Hearne said.
The idea is to roughly double mine production to 5 million tonnes per year resulting in an increase in zinc-lead concentrate output to 800,000 tonnes a year versus 384,000 last year.
The mine, located 900 kms (550 miles) southeast of Darwin, started as an underground mine in 1995 before converting to open pit mining in 2009 in order to extend its operational life.
The plan is subject to findings of feasibility studies linked to technology trials in Europe and also an environmental assessment, the company said. (Reporting by Jim Regan; Editing by Himani Sarkar)
http://af.reuters.com/article/energyOilNews/idAFL3E7EB01N20110311
