Xstrata, the world’s largest exporter of coal used for power, said its first half profit more than tripled on the back of a jump in metal prices from a year earlier.
The Zug, Switzerland-based company said that net income rose to $2.3 billion (approximately €1.7 billion) from $690 million a year earlier, beating analysts’ estimates. Sales rose by 43 per cent to $13.7 billion (approx. €10.3 billion).
The company is spending $14 billion to expand output 50 per cent by 2014, betting on rising demand for metal and coal as the world economy recovers from recession. Metal prices were on average 66 per cent higher in the first half than in the same period a year ago.
In particular, average copper prices in the second quarter surged 75 per cent and zinc prices 63 per cent, compared with the same period a year ago.
Commenting on the results, Mick Davis, Xstrata’s chief executive officer, commented: “Xstrata’s first half performance was characterised by another robust cost performance, volume growth in most key commodities and positive momentum in developing our industry-leading pipeline of organic growth projects.”
He went on to say: “The US is likely to continue to provide an important base of demand for exports from developing countries and directly for commodities as its economic recovery continues. However the developing economies, led by China, Brazil and India, are set to continue to provide the main driver of demand growth for our products.
“I remain very confident that Xstrata’s industry-leading growth prospects, attractive commodity mix and proven ability to realise value from the optimisation of our existing portfolio position the Group to deliver superior returns to its shareholders.”
The company is on track to meet its output target after approving $8 billion of new projects in the first half. Today it approved the $4.2 billion Las Bambas copper project in southern Peru, as well as the $1.1 billion Ulan West coal venture in Australia. Last month it approved an investment of $1.5 billion to develop the Antapaccay copper mine in Peru.
