Xstrata to lavish $260,000 on every resident of tiny Australian town

A tiny Australian town, with a population of less than 380 people, could get about $106 million (A$100) from mining giant Xstrata (LON:XTA) if the Swiss company decides to go ahead with its $6 billion coal project bordering the local community. This represents average benefit of $260,000 for each resident who are mostly farmers and cattle grazers.

Wandoan, which sits on the edge of what will become Australia's biggest coal mine and it is only a five-hour drive from Brisbane, is one of the seven Aussie towns projected to attract billions in mining projects due to their mineral wealth.

It is a common practice for mining companies to pay communities a nominal amount before starting up projects, but analysts quoted by The Telegraph believe the amount Wandoan was requesting is, to say the less, unusual.

"Someone has to pay and, I'm sorry, it shouldn't be my community and residents," said Ray Brown, the mayor of the Western Downs Regional Council. "This is a starting point."

Brown added the sum demanded from Xstrata would be used to build roads, sewerage and water-related facilities and upgrade the local airport to accommodate fly-in, fly-out workers the company will bring in.

The Swiss miner bought 40,000 hectares of grazing land in Wandoan to set up its mining operations saying, the venture would create 1,300 jobs during the construction phase and 900 when it operates.

Xstrata also estimates it will spend an average of $16 million yearly in the town through the purchase of goods and services that would support the proposed coal mine operations.

Besides, the project and its associated rail and port developments would help establish the Surat Basin as the next major coal export region for Queensland, said Reinhold Schmidt, Xstrata Coal Queensland CEO, in March.

The project, as outlined in Xstrata’s webpage, envisions a 22 million tonnes saleable thermal coal operation, with further growth potential beyond that.

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