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.romig@ dowjones.com

  (END) Dow Jones Newswires   05-30-08 1420ET   Copyright (c) 2008 Dow Jones & Company, Inc.