Xstrata targeting twice as much nickel in 5 years

By James Regan

KALGOORLIE, Australia (Reuters) - Swiss-based Xstrata is targeting a doubling of nickel production within five years, a senior executive said on Wednesday, rivalling the dominance of bigger sector rivals in Russia, Brazil and Australia.

Xstrata's chief financial officer for its nickel arm, Shaun Usmar, said a hefty exploration budget coupled with an eye toward acquiring other miners would lead to the leap in output.

"We should produce around 110,000 tonnes of nickel this year and double that in five years, Usmar told Reuters on the side of the Diggers and Dealers mining conference.

At current consumption rates, that would equate to almost a fifth of annual world consumption.

Xstrata, which earlier on Wednesday announced a $10 billion (5.1 billion pound) unsolicited offer for African platinum producer Lonmin, has emerged as active predator on the global mining scene.

It also repelled an overture analyst estimated was worth $90 billion from Brazilian iron ore miner Vale, which had already bought its way into the nickel market by acquiring world No. 2 producer Inco.

Besides developing and expanding mines in New Caledonia, Australia, Canada, Dominican Republic, Africa and Norway, this year Xstrata will spend about $170 million to find more of the stainless steel making alloy, Usmar said.

"We believe in the long-term strength of the nickel market, Usmar said, despite the metal losing about a third of its value so far this year on the London Metal Exchange over concerns a global supply glut was looming.