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Production Report for six months ended 30 June 2008 (PDF)

Zug, 30 July 2008

Highlights:

  • Record first half production of ferrochrome, platinum, semi-soft and coking coal, refined nickel, zinc in concentrate and lead in concentrate
  • Coal production recovered strongly from adverse weather conditions in Queensland, Australia and in South Africa in the first quarter, which impacted all open pit coal producers
  • Electricity to South African operations continues to be restricted to 90% of normal supply, constraining production growth in ferrochrome and vanadium and, to a lesser extent, South African thermal coal
  • Copper, coal, nickel and zinc production accelerated in the second quarter compared to the first quarter, with further significant volume growth expected in the second half
  • A number of key growth projects were successfully completed and contributed to volume growth in key commodities, including:
    • expansion of the Mount Owen coal handling and preparation plant and commissioning of the new Southstock 5-seam underground mine
    • ramp up of the first phase of the Elandsfontein platinum mine and PGM concentrator in South Africa, which reached steady state production ahead of schedule
    • ramp up of the low-cost Lion ferrochrome smelting complex and Bokamoso pelletising plant
  • Several projects currently in execution will start to deliver growth from the second half of the year, including:
    • commissioning of the Sinclair nickel mine in Western Australia and the Perseverance zinc mine in Canada
    • completion of the new Liddell coal handling and preparation plant
    • expansions to the Lomas Bayas copper mine and Altonorte smelter in Chile and the McArthur River Mine zinc-lead open-pit and concentrator in the Northern Territory, Australia
    • ramp up of the Mount Isa zinc-lead concentrator expansion to increase annual capacity to 8 million tonnes and augment metal production by 30% year-on-year
    • continued ramp up of the 32 million tonnes per annum expansion to Cerrejón coal mine in Colombia
  • Successful integration of the recently acquired Resource Pacific, Jubilee and Tahmoor operations contributed to first half production growth and will provide meaningful future growth
  • Significantly stronger second half performance expected across the portfolio on the back of higher grades at a number of copper and nickel operations, the resolution of one-off operational issues and the contribution of recently acquired and newly commissioned operations.

Xstrata Alloys

Chrome volumes increased by 3% in the first half of 2008 compared to the same period last year, a new six month production record.  This was achieved as a result of the ramp up of the new Lion smelter and the full 6 month contribution from previously idled capacity, which was gradually returned to production during the first half of 2007.  The full benefit of additional capacity was partially offset by planned and extended furnace shutdowns in response to reduced electricity supply from Eskom (South Africa’s power utility), as part of a national energy shortage in South Africa.  Reduced power supply also impacted vanadium volumes, which fell by 25% compared to the same period in 2007.

Platinum volumes increased by 198% reflecting the ramp up of the Elandsfontein mine acquired through the Eland Platinum transaction in the fourth quarter of 2007.

Chrome

 

Six months
to 30.06.08

Six months
to 30.06.07

Year ended
31.12.07

Attributable* saleable production (kt)

615

598

1,219

* Including Xstrata’s 79.5% share of the Xstrata-Merafe Chrome Venture

 

Vanadium

 

Six months
to 30.06.08

Six months
to 30.06.07

Year ended
31.12.07

Consolidated* saleable production

 

 

 

   Ferrovanadium (k kg)

1,528

2,055

4,280

   Vanadium pentoxide (k lb)

6,927

9,249

18,870

* Consolidated 100%

 

Platinum

 

Six months
to 30.06.08

Six months
to 30.06.07

Year ended
31.12.07

Consolidated* saleable production (oz)

 

 

 

Platinum

64,518

21,619

57,303

Palladium

30,625

12,773

32,618

Rhodium

8,056

3,684

9,294

* Consolidated 100% of Eland and 50% of Mototolo

 


Xstrata Coal

Total consolidated production volumes increased by 4% to 40 million tonnes during the first half of 2008, due to higher volumes of semi-soft and coking coal, up 22% and 39% respectively over the first half of 2007, and stable thermal coal production. 

The New South Wales operations prioritised higher-margin semi-soft coal production at the expense of growth in thermal coal production.  Semi-soft production also benefited from the inclusion of the recent Resource Pacific acquisition.  Lower thermal coal production in New South Wales was offset by improved operational performance at Cerrejón in Colombia, as the operation ramps up to an annual run rate of 32 million tonnes per annum.  Thermal coal production in Queensland and South Africa recovered well from heavy rainfall in both regions and South African power outages, with production remaining consistent with the prior period. 

Despite extreme storms in Queensland, coking coal production was boosted by improved performance from the Oaky Creek longwalls and the inclusion of the recently acquired Tahmoor operation in New South Wales.

 (million tonnes)

Six months
to 30.06.08

Six months
to 30.06.07

Year ended
31.12.07

Total consolidated production

39.6

38.1

82.8

Total thermal coal

33.1

33.1

69.6

Australian thermal

16.9

17.4

35.0

South African thermal*

11.0

11.0

24.7

Americas thermal

5.2

4.7

9.9

Total coking coal (Australia)

3.2

2.3

6.8

Total semi-soft coking (Australia)

3.3

2.7

6.4

* For production reporting DTJV is included for the first six months. For financial reporting DTJV will be excluded from Xstrata Coal’s ex-mine results as a result of the DTJV re-structuring announced on 3 March 2008


 

Xstrata Copper

Total mined copper production remained at a similar level to the first half of 2007.  Volumes were significantly higher at Ernest Henry Mine due to higher head grades and at Collahuasi, where production in the comparable period of 2007 was impacted by a shutdown of the main SAG mill.  At Antamina the mine plan moved into a section of higher copper grade ore which boosted production despite lower milling rates resulting from operational difficulties with the SAG mill.

The benefit of improved performance at these operations was offset by lower volumes at Minera Alumbrera, Tintaya and Lomas Bayas.  At Alumbrera, lower mining rates caused by lower grades and increased haulage distances were compounded by the processing of oxidised stockpiles with consequent lower recoveries.  Production at Tintaya was constrained by lower grades, the treatment of high clay content ores and adverse weather.  At Lomas Bayas, production was affected by conveyor system failures and acid supply issues.

Gold production increased by 3% due to higher grades at Ernest Henry, partially offset by lower volumes from Alumbrera.

 

Six months
to 30.06.08

Six months
to 30.06.07

Year ended
31.12.07

Argentina – Alumbrera*

 

 

 

Material mined (t)

47,067,883

57,780,262

109,925,781

Ore mined (t)

8,457,363

13,328,046

25,617,080

Copper head grade (%)

0.45

0.52

0.56

Gold head grade (g/t)

0.55

0.57

0.67

Ore treated (t)

18,534,333

19,288,423

38,606,768

Concentrate produced (t)

268,320

322,603

697,525

Copper in concentrate (t)

65,674

83,447

180,223

Gold in concentrate (oz)

217,407

228,832

540,788

Gold in doré (oz)

28,001

21,935

74,372

Total gold (oz)

245,408

250,767

615,160

Australia - Ernest Henry

 

 

 

Material mined (t)

18,527,862

22,087,316

40,388,117

Ore mined (t)

7,848,977

4,195,595

11,547,835

Copper head grade (%)

1.08

0.82

0.94

Gold head grade (g/t)

0.54

0.41

0.47

Ore treated (t)

5,656,346

5,254,823

11,114,286

Concentrate produced (t)

195,061

133,794

326,857

Copper in concentrate (t)

55,739

39,512

95,846

Gold in concentrate (oz)

74,024

49,975

123,305

Australia - Mount Isa

 

 

 

Ore mined (t)

2,783,427

2,768,737

6,008,567

Copper head grade (%)

2.81

3.04

3.12

Ore treated (t)

2,783,426

2,829,044

6,059,744

Concentrate produced from ore (t)

272,802

314,658

679,948

Copper in concentrate from ore (t)

70,950

78,452

172,552

Anode copper (t)

110,733

113,340

217,907

Refined copper (t)

119,142

116,402

231,959

Canada - Kidd Creek mine copper

 

 

 

Ore mined (t)

1,308,572

1,203,418

2,346,260

Copper head grade (%)

1.68

1.95

 2.10

Ore treated (t)

1,263,504

1,223,162

2,364,603

Concentrate produced (t)

69,999

80,197

163,130

Copper in concentrate (t)

19,488

22,503

46,615

Copper cathode (t)

63,768

60,692

127,784

Canada - Horne

 

 

 

Concentrate treated (t)

389,276

403,608

796,639

Anode copper (t)

86,582

85,063

177,289

Canada - CCR Refinery

 

 

 

Refined copper (t)

179,503

164,400

319,552

Chile – Collahuasi**

 

 

 

Material mined (t)

36,352,800

42,455,556

79,982,760

Ore mined (t)

11,818,840

13,723,947

27,266,800

Copper head grade (%)

1.15

0.93

1.10

Ore milled (t)

9,456,884

8,814,901

19,219,139

Concentrate produced (t)

324,327

241,494

592,234

Copper in concentrate (t)

87,347

70,647

173,303

Copper cathode (t)

11,124

12,982

25,593

Chile - Lomas Bayas

 

 

 

Material mined (t)

23,303,000

25,300,000

47,997,375

ROM leach (t)

12,568,000

10,818,060

22,441,476

ROM copper grade (%)

0.22

0.25

0.25

Heap leach (t)

6,793,000

6,252,028

13,098,070

Heap leach copper grade (%)

0.4

0.43

0.41

Copper cathode (t)

28,292

32,587

61,401

Chile - Altonorte

 

 

 

Anode copper (t)

127,339

141,777

272,846

Peru - Antamina Copper***

 

 

 

Material mined (t)

19,720,281

18,043,594

39,115,169

Ore mined (t)

6,025,238

5,688,596

12,337,415

Copper head grade (%)

1.30

1.13

1.21

Ore treated (t)

4,808,492 

5,357,509

10,521,097

Copper concentrate produced (t)

198,954

181,848

383,109

Copper in concentrate (t)

56,908

52,455

111,347

Peru - Tintaya

 

 

 

Material mined (t)

38,773,288

36,919,900

76,453,827

Ore mined (t)

3,741,261

5,588,642

11,766,019

Ore milled (t)

3,401,373

3,257,272

6,766,802

Copper grade in ore milled (%)

1.22

1.38

1.44

Gold grade in ore milled (g/t)

0.21

0.37

0.36

Concentrate produced (t)

107,389

115,463

251,094

Copper in concentrate (t)

32,782

39,598

83,802

Gold in concentrate (oz)

12,256

20,458

38,792

Copper cathode (t)

12,178

16,953

35,982

Total mined copper production (t) (contained metal)

444,269

449,136

986,663

Total mined gold production (oz) (contained metal)

331,688

321,200

777,257

Total copper cathode (t) (from mined and third party material)

414,007

404,016

802,271

* 100% consolidated figures
** Xstrata Copper's pro-rata share of Collahuasi (44%)
*** Xstrata Copper's pro-rata share of Antamina (33.75%)

 

Xstrata Nickel

Despite a stronger second quarter performance, total mined nickel production decreased by 6% in the first half of 2008 compared to the same period last year. Production at the Sudbury and Montcalm operations was impacted by lower grades, reflecting the current transitional phase between existing Sudbury mines, which are nearing their end of life and the commencement of production at the new low-cost Nickel Rim South and Fraser Morgan mines in 2009.  Expansion of the Raglan Mine in the Canadian Arctic continues, however severe weather, planned maintenance and lower head grades at the existing operation reduced first half mined nickel production by 16%.

Lower mine feed from the Sudbury operations also impacted nickel in matte production at the Sudbury Smelter, but was partly offset by increased volumes of third party feed.  Nikkelverk achieved first-half record production of refined nickel resulting from improved efficiency at the nickel tankhouses.

Xstrata Nickel Australasia (XNA), a new operating division created following the acquisition of Jubilee Mines NL which completed on 22 February 2008, contributed 2,712 tonnes of mined nickel. The integration of the acquisition is proceeding well and work continues to focus on optimising the mine planning schedule and increasing drilling activity to enable production to increase in the second half of 2008.

Despite planned maintenance shutdowns in early 2008, Falcondo achieved a solid production performance of 14,395 tonnes of ferronickel.  Significant progress has been made to expedite the studies of a coal conversion project to reduce Falcondo’s reliance on crude oil in a high oil price environment.

 

Six months
to 30.06.08

Six months
to 30.06.07

Year ended
31.12.07

North America – Sudbury Operations

 

 

 

Ore mined (t)

882,151

982,712

1,866,022

Nickel head grade (%)

0.96

1.06

1.04

Copper head grade (%)

1.16

1.12

1.10

Ore treated (t)

1,033,141

1,133,752

2,177,105

Nickel in concentrate (t)

8,533

10,794

19,757

Nickel in matte (t)

30,488

33,535

67,576

Copper in concentrate (t)

10,785

11,711

21,853

Copper in matte (t)

9,245

11,094

21,978

Cobalt in concentrate (t)

270

334

620

Cobalt in matte (t)

1,190

1,125

2,498

North America – Montcalm

 

 

 

Ore mined (t)

503,896

476,166

929,251

Nickel head grade (%)

1.27

1.37

1.34

Copper head grade (%)

0.67

0.69

0.66

Ore treated (t)

463,491

464,041

940,853

Nickel in concentrate (t)

4,748

5,061

10,140

Copper in concentrate (t)

2,618

2,791

5,443

Cobalt in concentrate (t)

182

203

404

North America – Raglan

 

 

 

Ore mined (t)

686,836

606,174

1,127,383

Nickel head grade (%)

2.22

2.75

2.58

Copper head grade (%)

0.60

0.80

0.73

Ore treated (t)

650,594

603,266

1,153,582

Nickel in concentrate (t)

12,339

14,619

26,059

Copper in concentrate (t)

3,015

3,841

6,729

Cobalt in concentrate (t)

261

289

523

Australia – XNA*

 

 

 

Ore mined (t)

99,549

-

-

Nickel head grade (%)

3.35

-

-

Ore treated (t)

96,139

-

-

Nickel in concentrate (t)

2,712

-

-

Copper in concentrate (t)

104

-

-

Cobalt in concentrate (t)

33

-

-

Dominican Republic – Falcondo**

 

 

 

Ore mined (t)

2,090,601

2,044,362

4,062,530

Nickel head grade (%)

1.17

1.16

1.16

Ore treated (t)

1,326,795

1,295,791

2,563,961

Nickel in ferronickel (t)

14,395

14,749

29,130

Europe – Nikkelverk

 

 

 

Nickel metal (t)

43,574

42,871

87,590

Copper metal (t)

18,796

17,969

34,212

Cobalt metal (t)

1,665

1,919

3,939

Total mined nickel production (t) (contained metal)

26,610

28,349

52,108

Total mined ferronickel production (t) (contained metal)

14,395

14,749

29,130

Total mined copper production (t) (contained metal)

15,215

17,121

31,425

Total mined cobalt production (t) (contained metal)

683

755

1,412

* Consolidated from 31 January 2008
** 100% consolidated figures


 

Xstrata Zinc

During the first half of 2008, Xstrata Zinc achieved record production of zinc in concentrate. The expansion of the Australian operations and improved productivity increased volumes of zinc concentrate despite slightly lower head grades, offset to some extent by lower production in Canada, following a seismic event at the Brunswick mine in January which sustained minor damage to the operation. Total zinc metal production was marginally lower following the failure of a transformer at the San Juan de Nieva smelter in the first quarter, which offset the benefit of improved recoveries at the Nordenham and Canadian refineries.

Lead in concentrate production increased by 16% to achieve a record six month production.  This was realised through recent expansions, higher grades and improved concentrator recoveries at the Australian operations. Lead metal production at the Northfleet refinery was up 23%, primarily due to increased volumes of Mount Isa concentrate.

 

Six months
to 30.06.08

Six months
to 30.06.07

Year ended
31.12.07

Australia – Mount Isa

 

 

 

Ore mined (t)

2,891,174

2,732,429

5,120,651

Zinc head grade (%)

6.1

6.5

6.5

Lead head grade (%)

3.7

3.3

3.3

Silver head grade (g/t)

76.9

69.8

69.1

Ore treated (t)

2,843,197

2,789,717

4,986,078

Zinc in concentrate (t)

128,567

115,248

226,529

Lead in concentrate (t)

73,798

55,586

104,381

Lead in lead/silver bullion (t)

83,139

56,669

125,572

Lead in purchased concentrate smelted(t)

19,349

8,490

31,560

Silver in crude lead (koz)

5,263

3,192

7,533

Silver in purchased concentrate smelted (koz)

2,357

1,046

4,042

Australia – McArthur River

 

 

 

Ore mined (t)

1,021,473

817,419

1,961,347

Zinc head grade (%)

9.0

10.2

10.2

Lead head grade (%)

4.4

4.1

4.2

Ore treated (t)

1,035,318

945,837

1,886,627

Zinc in concentrate (t)

66,562

70,549

137,737

Lead in concentrate (t)

18,002

16,159

33,040

Silver in concentrate (koz)

607

597

1,184

Australia – Lennard Shelf*

 

 

 

Zinc in concentrate (t)

12,422

6,458

21,045

Lead in lead concentrate (t)

3,632

2,406

6,197

Europe – San Juan de Nieva

 

 

 

Zinc metal (t)

223,454

247,690

478,031

Europe – Nordenham

 

 

 

Zinc metal (t)

78,737

71,920

150,222

Europe – Northfleet

 

 

 

Mount Isa sourced lead (t)

71,119

50,277

111,974

Other lead (t)

81

7,432

7,417

Total lead (t)

71,200

57,709

119,391

Mount Isa refined silver (koz)

4,031

2,331

5,808

Total silver (koz)

4,031

2,331

5,808

North America – Brunswick mine

 

 

 

Ore mined (t)

1,675,866

1,788,195

3,437,265

Zinc head grade (%)

8.1

8.1

8.4

Lead head grade (%)

3.1

3.1

3.3

Silver head grade (g/t)

103.3

102.1

105.0

Ore treated (t)

1,662,290

1,768,311

3,411,156

Zinc in zinc concentrate (t)

107,517

117,439

230,991

Zinc in bulk concentrate (t)

8,660

10,218

20,804

Lead in bulk concentrate (t)

6,419

7,927

16,926

Lead in lead concentrate (t)

25,902

27,709

53,191

Lead in lead concentrate to smelter (t)

25,412

31,174

54,238

Lead in other feeds to smelter (t)

16,860

9,199

16,539

Total refined lead (t)

42,272

41,824

70,777

Silver in bulk concentrate (koz)

456

508

1,094

Silver in lead concentrate to smelter (koz)

1,307

1,469

2,643

Silver in other feeds to smelter (koz)

1,525

1,329

2,336

Total silver in doré (koz)

2,780

2,846

4,979

North America – CEZ refinery **

 

 

 

Zinc metal (t)

35,945

31,549

72,924

North America-Kidd Creek

 

 

 

Zinc metal (t)

73,807

63,329

142,549

Peru - Antamina Zinc***

 

 

 

Ore mined (t)

6,025,252

5,688,593

12,337,415

Zinc head grade (%)

1.5

2.1

1.2

Ore treated (t)

4,808,497

2,299,722

10,521,090

Zinc in concentrate (t)

57,050

57,132

98,449

Total zinc in concentrate production (t)

380,778

377,044

735,555

Total zinc metal production (t)

411,943

414,488

843,726

Total lead in concentrate production (t)

127,753

109,787

213,735

Total lead metal production (t)

113,472

99,533

190,168

* Xstrata Zinc’s pro-rata share of Lennard Shelf production (50%), closure announced on 14 July 2008
** Xstrata Zinc’s pro-rata share of CEZ production (25%)
*** Xstrata Zinc’s pro-rata share of Antamina production (33.75%)

Ends

 

Xstrata contacts:

 

 

Investors & analysts
Claire Divver

Hanré Rossouw
Telephone
+44 20 7968 2871

Telephone
+44 20 7968 2820
Mobile
+44 7785 964 340

Mobile
+44 7879 455 885
Email
cdivver@xstrata.com

Email
hrossouw@xstrata.com

 

Pamela Bell

Telephone
+44 20 7968 2822

Mobile
+44 7799 626715

Email
pbell@xstrata.com

Notes to editors

About Xstrata plc

Xstrata is a global diversified mining group, listed on the London and Swiss Stock Exchanges, with its headquarters in Zug, Switzerland. Xstrata’s businesses maintain a meaningful position in seven major international commodity markets: copper, coking coal, thermal coal, ferrochrome, nickel, vanadium and zinc, with additional exposures to platinum group metals, gold, cobalt, lead and silver, recycling facilities and a suite of global technology products, many of which are industry leaders. The Group's operations and projects span 18 countries: Argentina, Australia, Brazil, Canada, Chile, Colombia, the Dominican Republic, Germany, New Caledonia, Norway, Papua New Guinea, Peru, the Philippines, South Africa, Spain, Tanzania, the USA and the UK. Xstrata employs approximately 56,000 people, including contractors.