2ndUPDATE:Xstrata 1H Coal Output Flat;Copper Cathode Output Up

27th Jul 2010 09:54

(Adds details, analyst comments, updated share price.) By Alex MacDonald Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Anglo-Swiss miner Xstrata PLC (XTA.LN) Tuesday reported a 2.8% rise in first half copper cathode production and coal output that was more or less unchanged. Copper and coal are the main earnings drivers for Xstrata, accounting for 42% and 39%, respectively, of 2009 earnings before interest, taxes, depreciation and amortization, or Ebitda. The FTSE-100 miner said copper cathode output was 371,173 tons in the first half, up from 360,950 tons in the same period of the previous year, when volumes were impacted by a record wet season in North Queensland and a global slump in sulfuric acid demand, which impacted refined copper production. Mined copper production, however, fell 3% to 434,147 tons due to lower volumes at Mount Isa and Ernest Henry and lower grades at Antamina. The production drop was partially offset by an 8% output rise at the Collahuasi mine due to increased mill recoveries. Total consolidated coal production was 38.6 million metric tons for the six months ending June 30, from 38.8 million tons during the same period a year earlier as a drop in thermal coal output was largely offset by higher coking coal and semi-soft coking coal output. The total coal output figure excluded production from the Colombian Prodeco coal mine, which was sold back to Glencore International AG in April for $2.25 billion plus other considerations. Thermal coal output declined in all of the company's major producing regions but was more pronounced in South Africa where it fell by 16%, partly due to labor action at South Africa's railway company Transnet and the planned closure of the Southstock Opencut mine in the second half of 2009. High rainfall at the new Goedgevonden mine and at Atcom East also impacted output. In Australia, semi-soft production increased 50% at the expense of thermal coal volumes to take advantage of higher market prices, the company said. Thermal coal output fell 7% due to flooding caused by heavy rain while coking coal output increased 73%. Xstrata's first half results, due to be released Aug. 3, should benefit from increased coking coal volumes since Australian export coking coal prices alone rose nearly 36% to $193.7/ton in the first half compared with the same period a year ago, according to the miner. Total zinc in concentrate production rose 5.6% to 521,563 tons from 493,808 tons. Total refined nickel production was up 8.3% to 45,458 tons from 41,972 tons although mined nickel output fell nearly 2% to 27,960 tons. Zinc accounted for 12% of Ebitda in 2009, while nickel accounted for 6%. Attributable production of saleable ferrochrome was 608,000 tons compared with 244,000 tons. Ferrochrome production rose significantly compared with the same period a year ago due to the restart of ferrochrome output in South Africa after many smelters were shutdown in the first quarter of 2009 due to electricity shortfalls in the country. Analysts at Liberum said Xstrata's first half output delivered good performance in copper and coal. Xstrata's mined copper output fell by a smaller amount than its mining peers BHP Billiton Ltd (BHP) and Rio Tinto PLC (RTP) in percentage terms, the bank said. Xstrata's coal division is also likely to benefit from a switch to higher margin semi-soft coking coal output, the bank added. As of 0835 GMT, Xstrata's shares were down 4 pence or 0.4% at 1032.50p a share compared to a 0.5% rise in the FTSE-100 stock index in London. Company Website: http://www.xstrata.com -By Alex MacDonald, Dow Jones Newswires; 44 20 7842 9328; [email protected] (END) Dow Jones Newswires July 27, 2010 04:54 ET (08:54 GMT)