Xstrata, the Swiss-based mining company, is to write down almost $2 billion (?1.2 billion) worth of assets in its nickel business after restructuring the business.

The massive writedown was blamed on an overhaul of Xstrata Nickel in
July, when the company closed several mines. In a statement the company
said that it had revalued its Australian, Norwegian and Canadian nickel
assets and decided to impose the $1.9 billion impairment charge.

The acquisitive company, which recently walked away from making an
offer for rival Anglo American after the UK Takeover Panel issued a
“put up or shut up” order, also announced that it was to close one of
its copper and zinc plants in Canada, as part of a further
restructuring, at a cost of $375 million.

Xstrata said that the falling value of the US dollar against the
Australian dollar and other producer country currencies had caused it
to rethink its assumptions of the impact of currency fluctuations in
the short and medium term, leading it to revise down the value of its
assets.

Last month Mick Davis, the chief executive of Xstrata, cashed in
hundreds of thousands of share options in the mining group, making just
under ?14 million in cash, with a spokesperson attributing the sell off
to “prudent portfolio management”.

Mr Davis said: “The impairments announced today reflect the structural
changes made to our nickel business during 2009, together with the very
signficant impact of short and medium term currency movements, which
have resulted in an exceptional impairment charge against Xstrata’s
assets.”

“These accounting measures do not impact the underlying financial
performance of the group’s operations or Xstrata’s strong growth
potential.”

Shares in Xstrata fell by 2.89 per cent to ?10.41 in early trading
today. The shares have almost trebled in value since January on the
back of a commodities boom.

Source: Times online

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