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Xstrata Coppers North Chile Division on Monday announced commencement of feasibility studies on an expansion that would more than double molybdenum processing capacity at its Altonorte metallurgical facility in Chile.

Molybdenum is used as a solid lubricant, a lubricant and grease additive, a catalyst in petroleum refining and in the steel and stainless industries, where it is an important additive for strength and corrosion resistance. Recently another company drilling for molybdenum, MetalCorp, said the price of molybdenum oxide has gone from $3 per pound to $30 per pound over the last two years due to strong demand and short supply.

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The Xstrata projects environmental impact study will go to Chiles environmental authorities for approval in early 2008. Subject to environmental approvals and a positive feasibility study, construction is expected to start in the second half of 2008 with commercial production commencing in the second half of 2009.

Xstrata said initial estimates indicated it will cost about $40 million to refurbish a second molybdenum roaster at Altonorte in northern Chile that is now idle and to construct a molybdenum leaching plant. The two projects would increase molybdenum processing capacity at Altonorte from the current 12,000 metric tons per year to 28,000 mt/y.

This project forms part of North Chile Divisions strategy to transform Altonorte into a world class metallurgical facility that meets the highest environmental standards and offers a wide diversity of products, said Jon Evans, North Chile Division chief operating officer. The Altonorte location is also implementing a series of environmental upgrade projects, at a cost of $28 million, including measures to capture emissions and a dust treatment plant.

Molybdenum falls under Xstratas commodity businesses, which have their headquarters in Zug, Switzerland and a corporate office in London.