Bloomberg, citing a contractor, reported that Xstrata Plc canceled a contract to build a plant at its Handlebar Hill zinc and lead project in Australia.

Sedgman said that Xstrata canceled the contract for Sedgman Ltd to build and operate the plant after a review of its operations.

Mr Mark Read CEO of Sedgman said that “The review has resulted in cancellation of certain capital expenditure due to current uncertainty in global financial and commodities markets.”

Xstrata’s zinc unit approved a plan to build a AUD 61 million open cut mine at Handlebar Hill at Mt. Isa in Queensland state on June 29th 2008. Drilling indicated a 4.3 million tonne reserve in an area south of the existing George Fisher underground mine. Xstrata planned to mine at a rate of 1.75 million tonnes a year and to spend AUD 120 million to expand the concentrator at Mt Isa to 8 million tonnes, from 6.5 million tonnes, to process the material.

Sedgman had won the AUD 70 million 5 year contract on August 28th 2008. Sedgman was to have responsibility for stockpiling and crushing zinc and lead ore and transporting it for processing at the Mt. Isa concentrating plant