Xstrata's Third-Quarter Coal Output Drops 5% on Shutdowns, Adverse Weather

Oct 19 (Bloomberg) -- Xstrata Plc, the largest exporter of power-station coal, said third-quarter coal production fell 5 percent following mine closures and adverse weather.

Output dropped to 21.9 million metric tons from 23 million tons a year earlier, the Zug, Switzerland-based company said today in a statement. Copper production rose 10 percent.

Coal output was cut by the halt of the Southstock project in South Africa, while production at Cerrejon in Colombia was curbed by heavy rain and Australian volumes were affected by the closure of the United underground colliery and industrial action at the Tahmoor mine. The report excluded production from the Prodeco unit in Colombia, which Xstrata sold back to Glencore International AG, its largest shareholder, in March.

Xstrata dropped 0.5 percent to 1,298 pence in London trading as of 8:53 a.m. local time, trimming its gain this year to 16 percent.

Copper production advanced to 233,647 tons in the third quarter from 212,173 tons as a result of improved mining rates and grades at the Ernest Henry and Mount Isa mines in Australia and the Kidd operation in Canada. Mined nickel climbed 12 percent to a record 16,174 tons because of a “significant” increase in volumes and grades at the Nickel Rim South mine in Canada, according to the statement.

On Track

"Xstrata reported third-quarter 2010 production numbers which were in line with our forecasts,” Heath Jansen, a London- based analyst at Citigroup Inc., said today in a note. “Consensus earnings are unlikely to change on the back of the numbers.”

Output of zinc in concentrate, an intermediate product shipped to smelters, fell by 10 percent, while ferrochrome output declined 7 percent, Xstrata said. Ferrochrome producers settled the third-quarter benchmark price at $1.30 a pound and achieved the same price for the fourth quarter.

The company also announced resources at its West Wall copper project in central Chile. The estimated inferred resource for the project’s Lagunillas deposit totals 750 million tons at a grade of 0.54 percent copper and 0.01 percent molybdenum, Xstrata said today in a separate statement.

Xstrata Copper and Anglo American Plc are equal owners of mining company West Wall SCM, which holds the project.

Xstrata will announce preliminary results for the year ending Dec. 31 on Feb. 7.