Xstrata to invest £3.3bn in two mines

The Anglo-Swiss group said it was cautious about the global economy in the near term, echoing the concerns of other miners, but was optimistic about medium-term growth in metals demand, particularly from emerging economies such as China and Brazil.

Xstrata, the world's biggest exporter of coal used in power plants, said it had approved $4.2bn to build the Las Bambas copper mine in Peru and $1.1bn for the Ulan West coal project in Australia.

The company, which built itself up through a series of acquisitions, has shifted focus and now has 15 major growth projects that will cost $14bn in total.

Chief financial officer Trevor Reid said: "This project pipeline will deliver 50 per cent growth in volumes and it's doing it at a rate of return of about 20 percent.

"It's inconceivable that that sort of transformational growth could be achieved through an acquisition."

Xstrata was not looking at reviving last year's failed effort to merge with Anglo American, he said.

"There's no interaction between the companies. It was, we believe, a compelling idea at the time, but it's not something that we're working on or spending any time on."

Analysts welcomed the results and the approval of new projects, which came earlier than expected.

Credit Suisse said the results reinforced its view that Xstrata was its top pick among the major mining groups with an "outperform" rating.