Costello should block Xstrata bid for WMC

22/12/04
The Gallop Government has urged Federal Treasurer Peter Costello to reject the bid by foreign-owned Xstrata Capital Holdings to take control of Western Australian mining giant WMC Resources.
Premier Geoff Gallop said it was not in WA's best interests for the bid to succeed.
"Xstrata's record in WA casts extreme doubt on its ability to act as a good corporate citizen which is one good reason why it should not be trusted with the large WA mineral reserves held by WMC Resources," Dr Gallop said.
"The Gallop Government has been the most pro-development Government in WA's history, achieving record levels of business investment, but we want corporate citizens that act in WA's best interests.
"The Legislative Assembly Economics Standing Committee found Xstrata's decision to close and partially dismantle the Windimurra vanadium project made it difficult for the operation to continue.
"With WMC Resources operating some of the State's largest mines and refineries and creating thousands of jobs, WA cannot afford a repeat of this behaviour.
"As a result, my Government has urged the Howard Government to act cautiously and reject Xstrata's takeover bid."
State Development Minister Clive Brown slammed the record of Opposition Leader Colin Barnett when Resources Development Minister in the Court Government.
"As a Minister, Colin Barnett did not act in WA's best interests," Mr Brown said.
"He neglected to use a State Agreement to protect the Windimurra vanadium mine from being dismantled.
"That decision cost the State millions.
"The Gallop Government is determined not to allow what happened at Windimurra to happen again and that is why I have written to Peter Costello, urging him to reject Xstrata's takeover bid."
WMC is the number one nickel producer in Australia and number three in the world, with annual sales revenue in excess of $1.5billion. It currently produces about 16 per cent of the world's nickel concentrate and does so within the second lowest quartile of the nickel industry cost curve.
Nickel is mined by WMC in WA at Leinster and Mt Keith. The company also operates a nickel concentrator at Kambalda, a nickel smelter at Kalgoorlie and a nickel refinery in Kwinana. With the exception of the Kwinana refinery, all of WMC's nickel operations are located in regional WA and make a significant contribution to the regional communities in which they operate.
In addition to its nickel mining and processing operations, WMC invests a considerable amount in ongoing exploration activities in various locations around the State.
Expected investment in 2005 for resource drilling, development studies and trials and exploration in WA is in the order of $90million.
The success of the company's exploration program is demonstrated by the recent announcement of a possible new nickel province based on drilling results at Collurabbie (160km east north east of Mt Keith).
Such activity is essential for the company to replace production from existing mines as reserves are exhausted and to enable it to maintain, or increase, its market share in the face of growing world demand.
WMC's operations in WA provide major returns to the WA community, both directly through employment opportunities (about1,900 direct jobs), especially in regional communities, and also indirectly through royalty payments to the State Government. The company contributed $32million in royalties in 2003-04 and royalty payments have totalled $157million over the past five financial years.
WMC's nickel operations are clearly of a world scale and of national significance. The company has other significant resource interests (primarily copper and uranium) in other parts of Australia.
Premier's office: 9222 9475