Xstrata seeks buyers for its Frieda River copper project in Papua New Guinea

Xstrata Plc, which has agreed to merge with commodities trading giant Glencore, plans to sell its majority stake in Frieda River copper project in Papua New Guinea, a deal which may fetch the Swiss diversified miner around $2 billion.

The Zug, Switzerland-based and London-listed company said that the sale is part of its review of its development projects globally.

Xstrata, the world's fourth-largest copper producer, holds an 81.8-per cent stake in Frieda River, while Australia's Highlands Pacific Ltd owns the remaining.

The Frieda River project is one of the world's largest undeveloped copper and gold deposits having estimated reserves of around 12 million tons of copper and 18.5 million ounces of gold.

An initial study released in November 2010 indicated the proposed mine is capable of producing 246,000 tons of copper annually and 379,000 ounces of gold.

Xstrata has already spent more than $250 million in the last five years on drilling and engineering studies and the project requires an estimated additional $5.3 billion to get it operational. That cost would be reduced if the project secures natural gas for its power supply, Highlands Pacific had said late last year.