Xstrata Mount Isa Mines has selected the Diamantina Power Station consortium, following a two year, competitive process to assess alternatives for long-term supply of electricity and gas.

To meet forecast demand for the life of Xstrata’s current and planned copper and zinc-lead operations in northwest Queensland, Australia, Xstrata has entered into a 17 year contract with the Diamantina Power Station consortium from 2013 to 2030, with gas supply and pricing fixed until 2023. The consortium comprises joint venture partners APA Group, the owner and operator of the Carpentaria Gas Pipeline, and national energy company, AGL Energy Limited.

Xstrata will also invest US$30 million (A$28 million) over the next two years to support modifications to existing infrastructure to accommodate the integration of the new gas-fired
Diamantina Power Station adjacent to the existing Mica Creek Power Station near Mount Isa.

Xstrata Copper North Queensland Chief Operating Officer Steve de Kruijff said the contract underpinned Xstrata’s ongoing investment in the region.

“This decision secures the long-term future of our current operations and growth projects in north west Queensland. The Diamantina Power Station consortium offers the most reliable and cost effective solution for our energy requirements. Critically, Diamantina Power Station is able to guarantee new capacity and gas supply from 2013, providing continuity of supply as current energy contracts expire,” Mr de Kruijff said.

Xstrata Zinc Australia Chief Operating Officer, Brian Hearne, said the potential 440MW capacity available through both Diamantina Power Station and the Mica Creek Power Station after the retirement of old plant, will support the life of mine planning for Xstrata’s north west Queensland operations, and expansionary projects currently in development and planning.

Diamantina Power Station will be built on a sublease within the Mount Isa Mines mining lease
(ML8058). Site works are planned to commence in the first quarter of 2012 with development approvals already being progressed with the Mount Isa City Council.