Reuters is reporting that global miner Xstrata is reviewing several projects in its portfolio, including the Frieda River copper mine in Papua New Guinea, according to its Frieda River partner Highlands Pacific.
Like other major miners under pressure to conserve capital amid uncertainty over global growth, rising costs and falling commodity prices, Xstrata has flagged it may slow down project spending.
“Recently Xstrata Copper has advised that it has commenced a market evaluation of a number of the projects in its portfolio, including Frieda River,” Australia-listed Highlands Pacific said in a statement.
It said Xstrata, which holds 81.8 percent of the Frieda River project, had confirmed it was committed to completing a feasibility study by December this year.
An Xstrata spokeswoman said the company expected to make an announcement on Frieda River “in the not to distant future”.
Xstrata is the world’s no. 4 copper producer but has said it wants to take the top spot, unseating Chile’s Codelco, BHP Billiton and Rio Tinto over the next three years.
Charlie Sartain, Xstrata’s copper division head, said last month a $7 billion capital expenditure programme to beef up copper mining, mainly in South America and Australia, was proceeding.
Since then, a decline in copper prices that began in January has accelerated, with the London 3-month contract fetching $7,545 a tonne, or $3.42 a pound, down from levels above $8,650 a tonne at the start of the year.
Xstrata already has projects under construction that are designed to boost its copper output by more than 50 percent to 1.5 million tonnes a year over the next three years.
Frieda River has an estimated resource of 12 million tonnes of copper and 18.5 million ounces of gold, and could produce 246,000 tonnes of copper a year, according to a pre-feasibility study in 2010.
Highlands Pacific said it hoped to seal an agreement in the next two days to sell a cornerstone stake in the company to PNG Sustainable Development Program Ltd (PNGSDP), a large investment company with strong ties in Papua New Guinea, which could assist in future developments.
PNGSDP is the majority shareholder in Ok Tedi Mining Ltd, operator of the Ok Tedi copper mine, once owned by BHP Billiton.
Highlands Pacific shares were on a trading halt pending the outcome of talks with its potential PNG backer.
Back in April this blog exclusively broke the story that Xstrata was considering pulling out of the Frieda River mine – Frieda River mine could be too expensive to build