Production Report for six months ended 30 June 2009

Zug, 28 July 2009

Highlights:

  • Increased production volumes of copper, thermal coal, mined nickel and zinc compared to the first half of 2008
  • Thermal coal production increased by 18%, due to higher production at the Newlands complex in Australia and the contribution of the acquired Prodeco operations in Colombia
  • Solid operational performances and higher copper production from Mount Isa, Alumbrera, Collahuasi, Tintaya, Lomas Bayas and Kidd mines offset reduced production from Ernest Henry and Antamina
  • Mined nickel production increased due to higher production from Raglan and Xstrata Nickel Australasia and high grade ores from initial production at Nickel Rim South, offsetting the impact of the closure of high-cost, end of life mines at Sudbury as part of Xstrata Nickel’s transformation into a low-cost producer and the suspension of Montcalm from March, due to geotechnical issues. The Falcondo ferronickel operation remained on care and maintenance throughout the first half
  • Increased output from Mount Isa zinc and McArthur River expansions, together with growth from the new Perseverance mine, resulted in a 30% increase in zinc in concentrate compared to the first half of 2008
  • The European benchmark ferrochrome price was settled at $0.89 per pound for the third quarter, up 29% from the second quarter.  In July, the Xstrata-Merafe Chrome Venture announced capacity utilisation had increased to 60% from 20%, in response to strengthening demand

Xstrata Alloys

Ferrochrome production in the first half was 60% lower than the same period in 2008, following the temporary suspension of up to 80% of production capacity through late 2008 and early 2009.   As the industry leader, the Xstrata-Merafe Chrome Venture acted swiftly to curtail production as demand for ferrochrome declined sharply from the third quarter of 2008 due to significant destocking in the stainless steel sector.

On 8 July 2009, the Xstrata-Merafe Chrome Venture announced that, in response to improved ferrochrome demand, production had been resumed at 60% of the Venture’s total capacity through the re-commissioning of several furnaces across all five ferrochrome operations.

Overall PGM volumes increased marginally compared to the same period last year, despite production being adversely affected by a combination of above average rainfall, which halted production at Eland for several days, as well as unforeseen geological anomalies encountered at Mototolo, which negatively affected the head grade.

Ferrochrome

Six months to 30.06.09 Six months to 30.06.08 Year ended 31.12.08
Attributable* saleable production (kt) 244 615 1,126
Indicative average published price (c/lb) (Metal Bulletin) 74.0 156.5 175.8
* Reflects Xstrata’s 79.5% share of the Xstrata-Merafe Chrome Venture

Vanadium

Six months to 30.06.09 Six months to 30.06.08 Year ended 31.12.08
Consolidated* saleable production
   Ferrovanadium (k kg) 1,313 1,528 3,622
   Vanadium pentoxide (k lb) 7,039 6,927 16,604
Indicative average published price ferrovanadium ($/kg V) (Metal Bulletin) 22.5 70.6 61.2
Indicative average published price vanadium pentoxide ($/lb) (Metal Bulletin)  5.2 14.4 13.5
* Consolidated 100%

Platinum

Six months to 30.06.09 Six months to 30.06.08 Year ended 31.12.08
Consolidated** saleable production (oz)
Platinum 63,508 64,518 138,098
Palladium 31,723 30,625 65,774
Rhodium 9,801 8,056 18,644
Average (London Platinum and Palladium Market) Platinum price ($/oz) 1,098 1,953 1,578
Average (London Platinum and Palladium Market) Palladium price ($/oz) 217 444 353
Average (Johnson Matthey) Rhodium price ($/oz) 1,290 8,862 6,558
** Consolidated 100% of Eland and 50% of Mototolo

 

Xstrata Coal

Xstrata Coal’s production volumes for the six months to June 2009 increased by 4.2 million tonnes or 11% over the corresponding period in 2008.  Australian thermal coal production increased by 11%, mainly from the highly productive Newlands Northern Underground mine in Queensland and due to New South Wales mines switching semi-soft coal production to thermal production. The increase more than compensated for lower production from South Africa due to the planned closure of Impunzi Underground and industrial action.

Production from Colombia increased due to the inclusion of the recently acquired Prodeco operation, which contributed 5 million tonnes from 1 January 2009, the effective date for its acquisition by Xstrata.

Longwall operations were suspended at Oaky No. 1 in December 2008 in response to weak demand from steelmakers and led to lower overall coking coal production in the first half.  Average realised coking coal prices reduced from $166 per tonne to $143 per tonne in the first half, as a result of the deferral of high-priced coking coal contracts settled in 2008 and the impact of selling into the Chinese spot market at prices below contracted prices.

 

(million tonnes) Six months to 30.06.09 Six months to 30.06.08 Year ended 31.12.08
Total consolidated production 43.8 39.6 85.5
Total thermal coal 39.0 33.1 73.3
Australian thermal 18.8 16.9 40.2
South African thermal* 9.8 11.0 22.7
Americas thermal** 10.4 5.2 10.4
Total coking coal (Australia) 2.2 3.2 6.9
Total semi-soft coking (Australia) 2.6 3.3 5.3
Average received export FOB coal price ($/t)
Australian thermal 89.2 78.5  95.6
South African thermal 69.8 76.4  80.9
Americas thermal 76.8 71.1  78.4
Australian coking 142.6 165.9  232.5
Australian semi-soft coking 169.8 107.3  157.5
* 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

** Includes Prodeco for the 6 months ended 30 June 2009

Xstrata Copper

In the first half of 2009, total mined copper production increased by 1% compared to the corresponding period in 2008. Higher grades and increased recoveries at Alumbrera and Mount Isa, together with higher grades at Kidd Mine and increased throughput and recoveries at Collahuasi more than offset a significant production decline at Ernest Henry and lower copper production at Antamina.  Mined cathode production at Lomas Bayas increased by 28% following the completion of an expansion at the end of 2008.

Output at Ernest Henry was significantly impacted in the first half by the impact of record wet season flooding that required extensive pit dewatering in the first half and by a higher rate of stripping required to access a new ore zone.  At Antamina, copper production reduced by 5% as the mine plan entered a lower copper grade zone and metallurgical recoveries were lower due to the processing of partially oxidized ores, partly offset by increased mill throughput.  Total copper production and sales are expected to be higher in the second half compared with the first half of 2009.

Total by-product gold production decreased by 11% due to the weather issues at Ernest Henry, partially offset by higher gold production at Tintaya. A global slump in demand for sulphuric acid, a by-product of the smelting process, left the Canadian operations overstocked in acid and unable to process all of the third party concentrates available, impacting custom copper cathode production volumes.

  Six months to 30.06.09 Six months to 30.06.08 Year ended 31.12.08
Argentina – Alumbrera*    
Material mined (t) 44,064,458 47,067,883 99,397,413
Ore mined (t) 13,679,496 8,457,363 28,070,827
Copper head grade (%) 0.49 0.45 0.50
Gold head grade (g/t) 0.56 0.55 0.55
Ore treated (t) 18,918,910 18,534,333 37,502,049
Concentrate produced (t) 293,944 268,320 614,810
Copper in concentrate (t) 76,465 65,674 156,893
Gold in concentrate (oz) 215,489 217,407 443,919
Gold in doré (oz) 35,500 28,001 60,484
Total gold (oz) 250,989 245,408 504,403
Australia - Ernest Henry
Material mined (t) 9,617,512 18,527,862 31,278,138
Ore mined (t) 954,372 7,848,977 12,164,437
Copper head grade (%) 1.16 1.08 1.07
Gold head grade (g/t) 0.61 0.54 0.53
Ore treated (t) 3,698,789 5,656,346 11,406,365
Concentrate produced (t) 74,356 195,061 387,803
Copper in concentrate (t) 20,651 55,739 110,890
Gold in concentrate (oz) 27,056 74,024 146,116
Australia - Mount Isa
Ore mined (t) 2,955,597 2,783,427 5,913,003
Copper head grade (%) 3.02 2.81 2.84
Ore treated (t) 2,985,404 2,783,426 5,881,244
Concentrate produced from ore (t) 316,817 272,802 583,937
Copper in concentrate from ore (t) 82,231 70,950 151,577
Anode copper (t) 111,130 110,733 236,210
Copper cathode (t) 131,057 119,142 266,517

 


Six months to 30.06.09 Six months to 30.06.08 Year ended 31.12.08
Canada - Kidd Creek mine copper
Ore mined (t) 1,080,426 1,308,572 2,565,112
Copper head grade (%) 1.99 1.68 1.88
Ore treated (t) 1,209,955 1,263,504 2,439,513
Concentrate produced (t) 82,752 69,999 156,796
Copper in concentrate (t) 22,248 19,488 42,723
Copper cathode (t) 32,201 63,768 87,327
Canada – Horne
Concentrate treated (t) 305,835 389,276 767,207
Anode copper (t) 65,793 86,582 171,483
Canada - CCR Refinery
Refined copper (t) 138,845 179,503 344,809
Chile – Collahuasi**
Material mined (t) 35,895,940 36,352,800 73,256,998
Ore mined (t) 12,650,365 11,818,840 25,387,918
Copper head grade (%) 1.08 1.15 1.18
Ore milled (t) 9,753,196 9,456,884 18,751,574
Concentrate produced (t) 368,125 324,327 692,587
Copper in concentrate (t) 99,520 87,347 182,585
Copper cathode (t) 9,551 11,124 21,732
Chile - Lomas Bayas
Material mined (t) 28,056,245 23,303,000 52,345,353
ROM leach (t) 20,234,501 12,568,000 31,109,378
ROM copper grade (%) 0.28 0.22 0.23
Heap leach (t) 6,498,747 6,793,000 13,670,161
Heap leach copper grade (%) 0.42 0.40 0.41
Copper cathode (t) 36,180 28,292 59,134
Chile – Altonorte
Concentrate treated (t) 442,346 435,003 822,836
Anode copper (t) 113,084 127,339 231,902
Peru - Antamina Copper***
Material mined (t) 19,049,069 19,720,281 39,341,572
Ore mined (t) 6,437,680 6,025,238 12,853,862
Copper head grade (%) 1.20 1.30 1.25
Ore treated (t) 5,497,928 4,808,492  10,272,815
Copper concentrate produced (t) 187,700 198,954 409,659
Copper in concentrate (t) 53,978 56,908 115,997
Peru – Tintaya
Material mined (t) 40,511,265 38,773,288 78,539,821
Ore mined (t) 3,389,118 3,741,261 8,886,330
Ore milled (t) 3,353,675 3,401,373 7,109,747
Copper grade in ore milled (%) 1.22 1.22 1.38
Gold grade in ore milled (g/t) 0.24 0.21 0.27
Concentrate produced (t) 105,507 107,389 272,850
Copper in concentrate (t) 33,570 32,782 83,632
Gold in concentrate (oz) 16,814 12,256 36,693
Copper cathode (t) 13,115 12,178 27,263
Total mined copper production (t) (contained metal) 447,509 444,269 952,426
Total mined gold production (oz) (contained metal) 294,859 331,688 687,212
Total copper cathode (t) (from mined and third party material) 360,950 414,007 806,782
Average LME copper cash price ($/t) 4,046 8,126  6,956
Average LBM gold price ($/oz) 915 912 872
* 100% consolidated figures 
** Including Xstrata Copper's pro-rata share of Collahuasi
*** Including Xstrata Copper's pro-rata share of Antamina

Xstrata Nickel

Total mined nickel production increased by 7% in the first half of 2009 due to increased production and higher grades from Raglan and Xstrata Nickel Australasia (XNA), and high-grade ores from initial production at the new, negative cash cost Nickel Rim South mine, which is on track to ramp up to 60% of full annual capacity by the end of 2009.

As a result of the restructuring of the Sudbury operations, which included the closure of the high-cost, end-of-life Craig and Thayer-Lindsley mines and the suspension of the Fraser Mine complex, mined ore from Sudbury was down by 70% compared to the first half year of 2008.  However, the impact at the Strathcona Mill was limited to a 51% decline in ore treated, due to custom feed volumes and the processing of inventories from Sudbury mines.

Unplanned ground movements at the Montcalm mine in Timmins led to the mine being temporarily suspended from the end of March. The operation was indefinitely suspended in June, after a geotechnical review revealed an unacceptable risk profile for further activity.  Mined ore from Montcalm subsequently fell by 59% compared to the same period last year.  Despite these accelerated closures or suspensions, nickel in matte production from Sudbury increased by 3% during the same period, mainly due to increased feed and grade from Raglan and XNA. 

Total mined ore at Raglan increased by 2% compared to the first half of 2008, surpassing 700,000 tonnes. Additional concentrate was shipped from Raglan and XNA following the Sudbury mine closures to sustain full utilisation of downstream facilities.  Nickel in concentrate production at XNA increased by 185% over the same period last year due to increased ore production and higher head grades from the Prospero mine, and the commissioning of Sinclair. 

Nickel production at the Nikkelverk refinery decreased by 4% to 41,972 tonnes in the first half of 2009 compared to 43,574 tonnes in the same period the previous year due to a decrease of 16% in third-party feed to the refinery, which was largely offset by increased grades from Raglan and XNA.

The Falcondo ferronickel operation in the Dominican Republic remains on care and maintenance.

Six months to 30.06.09 Six months to 30.06.08 Year ended 31.12.08
North America – Sudbury Operations
Ore mined (t) 262,496 882,151 1,641,687
Nickel head grade (%) 1.14 0.96 0.98
Copper head grade (%) 1.57 1.16 1.12
Ore treated (t) 510,878 1,033,141 1,914,763
Nickel in concentrate (t) 4,809 8,533 16,810
Nickel in matte (t) 31,442 30,488 64,906
Copper in concentrate (t) 8,534 10,785 19,138
Copper in matte (t) 8,408 9,245 17,811
Cobalt in concentrate (t) 137 270 538
Cobalt in matte (t) 1,181 1,190 2,648
North America – Montcalm
Ore mined (t) 208,681 503,896 953,871
Nickel head grade (%) 1.02 1.27 1.20
Copper head grade (%) 0.61 0.67 0.65
Ore treated (t) 226,399 463,491 927,158
Nickel in concentrate (t) 1,961 4,748 8,905
Copper in concentrate (t) 131 2,618 5,091
Cobalt in concentrate (t) 73 182 338
North America – Raglan
Ore mined (t) 701,809 686,836 1,314,191
Nickel head grade (%) 2.46 2.22 2.30
Copper head grade (%) 0.66 0.60 0.62
Ore treated (t) 683,034 650,594 1,300,133
Nickel in concentrate (t) 14,700 12,339 25,873
Copper in concentrate (t) 3,644 3,015 6,402
Cobalt in concentrate (t) 304 261 512

Six months to 30.06.09 Six months to 30.06.08 Year ended 31.12.08
Australia – XNA*
Ore mined (t) 304,440 99,549 286,254
Nickel head grade (%) 3.72 3.35 3.53
Ore treated (t) 296,516 96,139 262,857
Nickel in concentrate (t) 7,734 2,712 7,610
Copper in concentrate (t) 558 104 303
Cobalt in concentrate (t) 272 33 120
Dominican Republic – Falcondo**
Ore mined (t) 0 2,090,601 2,745,612
Nickel head grade (%) 0 1.17 1.14
Ore treated (t) 0 1,326,795 1,707,958
Nickel in ferronickel (t) 0 14,395 18,782
Europe – Nikkelverk
Nickel metal (t) 41,972 43,574 88,741
Copper metal (t) 16,279 18,796 37,027
Cobalt metal (t) 1,609 1,665 3,719
Total mined nickel production (t) (contained metal) 28,505 26,610 54,523
Total mined ferronickel production (t) (contained metal) 0 14,395 18,782
Total mined copper production (t) (contained metal) 11,870 15,215 27,703
Total mined cobalt production (t) (contained metal) 765 683 1,341
Average LME nickel cash price ($/tonne) 11,690 27,320  21,104
Average LME copper cash price ($/tonne) 4,046 8,126  6,956
Average Metal Bulletin cobalt low grade price ($/lb) 12.95 45.46  35.16
 * Consolidated from 31 January 2008
** 100% consolidated figures

Xstrata Zinc

In the first half of 2009, zinc in concentrate production increased by 30% compared to the same period of 2008, due to the successful restructuring and expansion of the Mount Isa zinc operations which resulted in a 20% increase in zinc concentrate production at Mount Isa, despite severe weather in north Queensland at the start of the year.  Production also increased from the new Perseverance mine and the Brunswick mine in Canada, more than offsetting the impact of the closure of the Lennard Shelf joint venture in 2008.  The expansion of the open pit operation at McArthur River Mine led to increased volumes despite the temporary suspension of production in the first quarter, following the invalidation by the Australian Federal Court of approval for the open pit operation.  Final approval for the expansion of the open pit at McArthur River was granted in February 2009.

Total zinc metal production was 3% lower compared to the same period in 2008, as a 9% increase in production at the San Juan de Nieva smelter was offset by an aggregated 14% reduction at the Nordenham, Kidd Creek and CEZinc smelters, implemented in response to constraints created by lower sulphuric acid demand and planned reductions to optimise power costs.  Lead in concentrate production was 14% lower than the same period last year as a result of planned lower lead head grades at Mount Isa at both underground and open pit mines.  Lead metal production was 7% higher, reflecting a continuous supply of crude lead to the Northfleet refinery compared to the prior period.

Six months to 30.06.09 Six months to 30.06.08 Year ended 31.12.08
Australia – Mount Isa
Ore mined (t) 3,168,683 2,891,174 6,357,981
Zinc head grade (%) 6.2 6.1 6.4
Lead head grade (%) 2.9 3.7 3.4
Silver head grade (g/t) 60.2 76.9 69.3
Ore treated (t) 3,476,765 2,843,197 6,099,914
Zinc in concentrate (t) 154,376 128,567 283,063
Lead in concentrate (t) 58,966 73,798 140,023
Lead in lead/silver bullion (t) 71,737 83,139 166,866
Lead in purchased concentrate smelted(t) 13,494 19,349 40,657
Silver in crude lead (koz) 4,274 5,263 10,197
Silver in purchased concentrate smelted (koz) 2,056 2,357 5,076
Australia – McArthur River
Ore mined (t) 872,383 1,021,473 1,977,476
Zinc head grade (%) 9.7 9.0 9.5
Lead head grade (%) 4.3 4.4 4.5
Ore treated (t) 946,390 1,035,318 2,111,993
Zinc in concentrate (t) 69,165 66,562 142,460
Lead in concentrate (t) 15,898 18,002 36,560
Silver in concentrate (koz) 596 607 1,282
Australia – Lennard Shelf*
Zinc in concentrate (t) - 12,422 15,385
Lead in lead concentrate (t) - 3,632 4,507
Europe – San Juan de Nieva
Zinc metal (t) 243,608 223,454 450,381
Europe – Nordenham
Zinc metal (t) 69,877 78,737 151,096
Europe – Northfleet
Mount Isa sourced lead (t) 76,312 71,119 138,959
Other lead (t) - 81 102
Total lead (t) 76,312 71,200 139,062
Mount Isa refined silver (koz) 4,405 4,031 7,907
Total silver (koz) 4,405 4,031 7,907

 

Six months to 30.06.09 Six months to 30.06.08 Year ended 31.12.08
North America – Brunswick mine
Ore mined (t) 1,745,616 1,675,866 3,311,624
Zinc head grade (%) 8.8 8.1 8.4
Lead head grade (%) 3.4 3.1 3.3
Silver head grade (g/t) 102.2 103.3 105.0
Ore treated (t) 1,721,549 1,662,290 3,300,726
Zinc in zinc concentrate (t) 122,296 107,517 222,033
Zinc in bulk concentrate (t) 10,887 8,660 20,445
Lead in bulk concentrate (t) 7,912 6,419 14,685
Lead in lead concentrate (t) 27,311 25,902 55,721
Lead in lead concentrate to smelter (t) 27,535 25,412 55,719
Lead in other feeds to smelter (t) 17,972 16,860 25,612
Total refined lead (t) 45,507 42,272 81,329
Silver in bulk concentrate (koz) 524 456 1,050
Silver in lead concentrate to smelter (koz) 1,319 1,307 2,838
Silver in other feeds to smelter (koz) 2,137 1,525 2,010
Total silver in doré (koz) 4,343 2,780 4,897
North America – CEZ refinery **
Zinc metal (t) 31,985 35,945 72,895
North America – Perseverance
Ore mined (t) 524,764 - 511,341
Zinc head grade (%) 14.66 - 13.5
Ore treated (t) 515,055 - 492,263
Zinc in concentrate (t) 69,255 - 60,265
Copper in concentrate (t) 4,318 - 3,793
North America-Kidd Creek
Zinc metal (t) 55,783 73,807 121,193
Peru - Antamina Zinc***
Ore mined (t) 6,437,680 6,025,252 12,853,862
Zinc head grade (%) 2.9 1.5 1.5
Ore treated (t) 5,497,942 4,808,497 10,272,815
Zinc in concentrate (t) 67,829 57,050 117,381
Total zinc in concentrate production (t) 493,808 380,778 861,033
Total zinc metal production (t) 401,253 411,943 795,565
Total lead in concentrate production (t) 110,086 127,753 251,496
Total lead metal production (t) 121,819 113,472 220,391
Average LME zinc price(US$/t) 1,322 2,269  1,870
Average LME lead price (US$/t) 1,332 2,601  2,084
* 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. Headquartered in Zug, Switzerland, Xstrata maintains a meaningful position in seven major international commodity markets: copper, coking coal, thermal coal, ferrochrome, nickel, vanadium and zinc, with a growing platinum group metals business, additional exposures to 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 19 countries.

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