By Alex MacDonald
LONDON-- Anglo-Swiss miner Xstrata PLC (XTA.LN) reported Tuesday
a mixed performance in its key copper and coal businesses, which
are typically its main earnings drivers.
Xstrata boosted coal production in 2012 on higher output from
its Australian thermal coal mines, while copper output fell due to
a poor performance at the Chilean Collahuasi mine and as it
transitions from old mines to new mines.
Zug, Switzerland-based Xstrata, which is seeking final
regulatory approval from China to merge with mining titan Glencore
International PLC (GLEN.LN), said consolidated coal production rose
7% to a record 90.4 million metric tons, while mined copper output
dropped 16% on the year to 747,042 tons as it transitioned from
older, end of life mines to new mines and addressed production
challenges at its Collahuasi joint venture.
By comparison, competitor Rio Tinto PLC (RIO) and Anglo American
increased their share of coal and copper production in 2012.
Prices for thermal coal, which is used to fuel power stations,
dropped in 2012 because of greater export availability from
producers in Indonesia and Australia, partly due to climatic
factors. In the United States, lower gas prices boosted natural gas
consumption at power stations, leading to lower coal consumption
and leaving more coal available for export.
Copper prices were also volatile in 2012 due to
weaker-than-expected economic growth in China and the lack of
economic recovery in Europe and the U.S., which resulted in
sluggish copper demand.
Coal and copper accounted for 41% and 37% respectively of the
company's first-half operating earnings before interest, tax,
depreciation and amortization, or Ebitda.
The company said that thermal coal output from its Australian
operations rose due to the restart or commencement of mining at
four mines, which more than offset closures at two other mines.
Meanwhile, Australian coking coal output fell 9% due in part to
engineering challenges at Oaky Creek No. 1 mine.
South African and Colombian coal output rose, it said.
On the copper front, Xstrata said production at Collahuasi, in
which it owns a 44% stake, decreased 38% in 2012 due to planned
lower grades, adverse weather conditions, safety stoppages and an
extended ball mill outage. The issues at the mine have been
addressed and annualized production is expected to be restored to
about 400,000 tons of copper a year in 2013. This will be buoyed by
the continued ramp up of its Antapaccay copper mine in Peru in
November.
Total zinc metal output was down 0.5% from 2011 at 734,370 tons,
while total nickel output rose 0.9% on the year to a record 106,873
tons. Production of zinc metal and nickel accounted for 12% and 9%
of first-half operating Ebitda.
Xstrata's shares closed Monday up 0.9% at 1,160 pence a share
and are up 9.6% since the beginning of the year. The U.K. FTSE 350
mining index rose 3.6% in the same period.
Write to Alex MacDonald at alex.macdonald@dowjones.com
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