Xstrata 1Q Refined Copper Output Up +3.6%, Coal +9%

LONDON, May 05, 2010 (Dow Jones Commodities News Select via Comtex) --Anglo-Swiss miner Xstrata PLC (XTA.LN) Wednesday reported a 3.6% rise in first quarter copper cathode production, 9% rise in coal output, and a sizable increase in both thermal and hard coking coal prices.

Copper and coal are the main earnings drivers for Xstrata, accounting for 42% and 39%, respectively, of full year earnings before interest, taxes, depreciation and amortization, or Ebitda.

Total consolidated coal production was 21.7 million metric tons for the three months ending Mar. 31, from 19.9 million tons during the same period a year earlier due mainly to higher coking and semi-soft production, the company said.

The figure included production from the Colombian Prodeco coal mine, which was sold back to Glencore International AG in April for $2.25 billion plus other considerations. Xstrata had purchased the mine last year for $2 billion as part of a deal that allowed Glencore, Xstrata's biggest shareholder, to participate in the miner's rights issue.

Xstrata said annually priced thermal coal contracts for north Asian customers rose 38% to $98/ton for the Japanese contract year beginning April 1 while hard coking coal contracts were settled in a range between $200/ton to $270/ton, with the average price closer to the upper end of the range.

Investec had expected an average price of $205/ton.

Quarterly semi-soft coking coal contracts for the period ending in June rose 114% to $167/ton compared with the same period a year ago.

Total zinc in concentrate production rose 15.4% to 255,913 tons from 221,729 tons. Total refined nickel production was up 7.6% to 23,045 tons from 21,412 tons.

Zinc accounted for 12% of Ebitda in 2009, while nickel accounted for 6%.

Attributable production of saleable ferrochrome was 305,000 tons compared with 73,000 tons, and consolidated saleable platinum production was 32,905 troy ounces compared with 32,985 ounces a year earlier.

Ferrochrome production rose significantly compared with the same period a year ago due to the restart of ferrochrome production in South Africa after many smelters were shutdown in the first quarter of 2009 due to electricity shortfalls in the country.

Benchmark ferrochrome prices for the second quarter are up 35% to $1.36 a pound from the previous quarter due to a stronger dollar and higher South African electricity prices.

Xstrata's first quarter production figures were "solid," mining analyst Michael Rawlinson of Liberum Capital said. But the coal output figures were "light," he added, since a part of the rise was due to output curtailments in the same period a year ago.

Rawlinson said he was encouraged by the start up of Xstrata's Nickel Rim South mine in Sudbury, Canada in April and the approval of two new projects: the Australian Black Star Open cut zinc mine expansion and the Peruvian Antamina copper-zinc expansion, in which Xstrata has a 33.75% stake. He has a buy rating on the stock.

At 0716 GMT, Xstrata's shares were up 10 pence or 1% at 1,011p a share while the FTSE-100 index was 0.2% lower.