BUENOS AIRES (Dow Jones)--An Argentine federal appeals court has
upheld criminal charges against an
Xstrata PLC
(XTA.LN) executive for contamination caused by the company's Alumbrera
copper and gold mine.
The court in Tucuman province on Thursday ordered Xstrata General
Manager Julian Rooney's assets seized, but refrained from ordering
imprisonment, according to local press reports.
Xstrata's local unit said in a press release Friday that the decision
was "unjust, arbitrary and baseless." The company said it was
analyzing options which will likely include appealing the decision.
The prosecution is based on a complaint filed in 1996 by a biologist
in Tucuman who accused the company of causing illegal contamination of
waterways with metals, according to local daily La Nacion. The
Alumbrera mine is located in neighboring Catamarca province, but a 317-
kilometer slurry pipeline flows across Tucuman.
Xstrata owns a 50% controlling interest in the Alumbrera mine, with
Canada's
Goldcorp Inc
. (GG) and
Yamana Gold Inc
. (AUY) holding the other half.
The mine launched operations in 1997 and was purchased in 2003 by
Xstrata. The mine produces 180,000 tons of copper concentrate and
650,000 ounces of gold concentrate per year, according to the
company.
The ruling comes amidst another battle between the company and
Argentina's government over a tax on mineral exports.
The government is currently appealing a lower-court decision won by
Xstrata earlier this year that invalidated a recent imposition of
export taxes on shipments from the Alumbrera mine.
A federal court in Rosario granted a restraining order allowing the
company to export the metal without the new tax.
The change in export taxes on mineral exports has spooked investors
and slowed development of the sector.
In December, customs agents demanded new taxes on exports of

Rio Tinto

PLC's (RIO.LN) Borax Argentina S.A., Procesadora de Boratos Argentinos
S.A., Minera del Altiplano FMC and Xstrata's Minera Alumbrera Ltd.
The companies had previously received letters from the Mining Ministry
certifying that they would enjoy tax stability for 30 years.
Xstrata and Rio Tinto filed lawsuits to block the imposition of the
new 5%-10% export taxes.
In 2002, the government implemented broad export taxes to generate
revenue amid a deep financial crisis. However, mines such as
Barrick Gold Corp
.'s (ABX) Veladero and Xstrata's Bajo del Alumbrera, which came online
prior to 2002, were given guarantees that their taxes would remain
unchanged based on a 1993 federal mining law.

-By Shane Romig, Dow Jones Newswires; 54-11-4590-2438;
shane.ro...@dowjones.com

(END) Dow Jones Newswires
05-30-08 1420ET
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