see copy of article below from ***** metals website 14th dec...

see copy of article below from kitco metals website 14th dec 2006.

Xstrata Nickel on asset hunt
Parent company urges unit to grow through expansion, new acquisitions
ANDY HOFFMAN

From Thursday's Globe and Mail

The head of Xstrata Nickel relishes the new directive coming from corporate head office in London.

Acquisitions, expanding operations and developing the business are all on the agenda for the company that houses the former nickel assets of Falconbridge Inc.

Getting bigger is a lot more fun than getting smaller, said Ian Pearce, who was named chief executive officer by parent company Xstrata PLC in August.

"The key driver that we picked up from Xstrata is growth. That's a very nice mandate. They want us to grow the business," he said in his first interview since taking on the top job.

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Currently the world's fourth-largest miner of the metal used to make stainless steel, producing about 110,000 tonnes a year, the nickel division has already formed a team to seek out possible targets.

Mr. Pearce, a 49-year-old native of South Africa, said Toronto-based Xstrata Nickel will consider any nickel asset up for grabs, whether in early stage development, near production or a full-fledged producer.

The litmus test for any purchase will be an ability to add value and find worth where others have not. That is another lesson learned from the parent company, which has expressed a willingness to bankroll the nickel division's appetite to enlarge.

"The big thing about Xstrata is their ability to fund. That's the central part of what Xstrata does for us. If we are able to show a business case for an acquisition, a growth strategy or even for an initiative to improve the operations to make them more effective, they will support us in that," Mr. Pearce said.

The tenor of the three years Mr. Pearce spent at Falconbridge before Xstrata's $18-billion takeover was radically different.

The Canadian company was mired in efforts to sell itself, distracting senior management and capping expansion efforts.

Now Xstrata Nickel has hopes of boosting total annual production by almost 100 per cent by 2012 to 221,000 tonnes. Growth will come from expansion at Raglan in Quebec's far north, increased efficiencies at the company's Falcondo plant in the Dominican Republic and production from its Nickel Rim project in Sudbury -- the cornerstone area of the company's operations.

Mr. Pearce said he wants to quickly secure a joint venture or co-operation agreement with Brazil's Companhia Vale do Rio Doce (CVRD) to share operations and save costs in the Northern Ontario city where many of the two companies operations sit side by side. CVRD recently took over long-time Falconbridge rival Inco Ltd.

"When you look at the value, it's got to be done sooner rather than later. There's some low-hanging fruit and we should take advantage of it," he said.

Both companies hope to lower transportation costs by processing each other's ore at facilities closer to their mines.

Xstrata used a synergy figure of $80-million (U.S.) related to a Sudbury joint venture when modelling the Falconbridge takeover, but Inco's number was much higher.

Yesterday, CVRD chief executive officer Roger Agnelli said early stage talks between the two sides have already begun and that savings in the mid- to long term could be as much as $200-million.

"We do have a very good relationship with Xstrata," he told reporters at a press conference in Brazil.

Analysts say a joint venture or co-operation agreement must be negotiated because of the high acquisition costs incurred by both sides.

"Putting Sudbury together and generating synergies is far and away the best way to create value in that company and it would cost next to nothing to do," said Victor Lazarovici of BMO Nesbitt Burns in New York.

However, the analyst warned that striking a deal involving workers and their rival unions won't be easy.

"It's going to be complicated and the devil can be in the details, but it's such an obvious thing it has to get done," he said.

The two companies are already swapping a small amount of product and Mr. Pearce has begun talking with Mark Cutifani, the head of CVRD's Sudbury operations. He admits there will be long-standing issues to be overcome if the cost savings are to be achieved.

"There's a lot of history that exists in Sudbury that shouldn't play, but it does," he said.

"One's got to be cognizant that you've got to break down some of those barriers in order to move forward."

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my view is that
this is very interesting as i believe minara must surely be on their hit list as glencore can easily give them 50pct control its just a matter of price.!!!!