Xstrata hoping for new projects to boost growth

Diversified mining group Xstrata saw stronger second-quarter production in coal, nickel, zinc and lead compared with the first quarter, but it was more of a mixed picture for the first half as a whole.

Total mined copper output rose 7% quarter-on-quarter (q/q) in the three months to June 30th, helped by volumes from the recently commissioned Antamina expansion. However, volumes in the first half as a whole were down 18% on last year as the group continued its transition from older end-of-life mines to new mines and expansion projects - these are expected to increase overall production volumes going into the second half.

Compared the first half with last year: consolidated coal output increased by 13% due to increased thermal coal volumes across every division; nickel volumes rose 3%; zinc production was flat; lead metal output was 11% higher; and attributable ferrochrome production volumes were down 21% due to the rescheduling of maintenance programmes.

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Gold production fell 28% in the first half compared with the first half of 2011, due to lower volumes and grades at its Ernest Henry (Australia) and Tintaya (Peru) and lower grades at Alumbrera (Argentina).

In a separate statement, the firm said that it has commenced open pit mining at the Mount Margaret copper project in north-west Queensland, with first ore output expected by the end of August.

"Mount Margaret will add around 30,000 tonnes of annual copper production to Ernest Henry over a five year period, strengthening the economics of the complex and taking immediate advantage of the available installed capacity of the concentrator and associated infrastructure," said Myles Johnson, the head of Xstrata's Ernest Henry Mining operation.

Mount Margaret is one of ten major approved growth projects that will reach commissioning in 2012. "The commissioning of tier one growth projects will reduce overall operating costs and improve the quality and robustness of our portfolio throughout the commodity cycle," Xstrata said.

BC