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Xstrata announces increased coal production in third quarter results

World Coal,

Switzerland-based miner, Xstrata, has announced its third quarter results with volumes of thermal coal, zinc and lead in concentrate and zinc metal increased compared to the third quarter last year. Strong thermal coal production during the first nine months of the year resulted in a 13% increase over the same period in 2011. 

Lower metallurgical and spot thermal coal prices have negatively impacted Xstrata Coal’s earnings in the period from July 2012. In response to industry-wide pressures, including low coal prices, high input costs and a strong Australian dollar against the US dollar, the company has initiated a planned restructuring of its business in Australia, including the reduction of around 600 contractor and permanent positions.

Xstrata Coal settled annual thermal coal contracts from October with Japanese customers at approximately US$ 97/t.

The company has also agreed terms for an all-share merger of equals with Glencore.

Xstrata’s coal production

In the third quarter of 2012, Xstrata’s total consolidated coal production was 24 million t, a slight increase on the corresponding period in 2011. Total consolidated production for the first nine months of the year increased by 8% on the same period in 2011, due to increased thermal coal production across every division.

Australian thermal coal operations

Australian thermal coal production, including semi soft, was 6%, or 0.8 million t, higher than the same period in 2011, mainly due to the restart of operations at Blakefield South mine in New South Wales. Early stage production tonnes from the Ulan and Ravensworth North opencast projects during the third quarter of 2012 and productivity improvements at Rolleston opencast mine also increased volumes. These increases were partly offset by the end of mine life closure at Westside, Ravensworth West and Baal Bone operations, all of which were still producing in the same period in 2011.

Australian metallurgical coal operations

Australian metallurgical coal production was down 0.8 million t, or 33%, on the third quarter of 2011, mainly due to engineering issues with the new thin seam longwall in operation at Oaky Creek No. 1, which are being resolved by the supplier. In addition, the timing of longwall moves at Oaky Creek North and Tahmoor operations further reduced volumes compared to the same period of 2011.

South African coal production

South African thermal coal production was 0.5 million t or 11% higher than the corresponding period in 2011 due to productivity improvements from the ongoing transition of Xstrata’s South African operations into large-scale, low-cost opencast operations. In addition, production in the comparable period of 2011 was impacted by industrial action.

Colombian coal production

Xstrata’s share of production from the Cerrejón joint venture in Colombia was in line with the corresponding period in 2011.

Written by Jonathan Rowland.

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