Xstrata production update disappoints

Ahead of results next week, the London-listed miner said mined copper output fell to 434,147 tonnes but failed to give an updated outlook

LONDON (Reuters) - 

Miner Xstrata (XTA.L) posted slightly weaker first half output than expected on Tuesday, including a dip in copper and flat coal production, its two most important products, ahead of financial results next week.

Shares in Xstrata, the world's biggest thermal coal exporter, were down 0.3 percent to 1033.5 pence by 0831 GMT, compared with a 0.3 percent rise in the UK mining index .FTNMX1770. So far this year, it has underperformed the index by 5 percent.

"Overall we think that today's results reflect a disappointing performance," said Alison Turner at Panmure Gordon.

Xstrata's 3 percent dip in copper output was less than declines from rivals BHP Billiton (BLT.L) (BHP.AX) and Rio Tinto (RIO.L) (RIO.AX), which have reported 18 percent and 5 percent weaker output of the metal in the latest quarter respectively. [ID:nSGE66J0K4]

Copper is expected to account for 38 percent of Xstrata's core earnings this year while coal is due to make up 35 percent, Liberum Capital has said. Xstrata is due to post interim financial results on Aug. 3.

PRICES UP

Prices for most of Xstrata's commodities have rebounded since the same period last year when the sector was in the midst of the global downturn that curbed demand.

Copper prices have soared 76 percent, nickel prices are up 82 percent while coal prices were mixed, Xstrata's report said.

The price of Australian thermal coal used in power stations fell 10 percent but coking coal for the steel sector from the same country jumped by 36 percent.

Anglo-Swiss Xstrata -- which has shifted focus to growth through building new mines instead of buying other companies -- did not provide an updated outlook in the report.

The group said mined copper output fell to 434,147 tonnes mainly due to reduced volumes and lower grades at Mount Isa and Ernest Henry mines during the first six months of the year.

Consolidated coal production was little changed at 38.6 million tonnes, down 200,000 tonnes, with thermal coal output lower and coking coal stronger.

Zinc in concentrate output rose by 6 percent due to expansions and productivity improvements at Mt. Isa and McArthur River mines.

Mined nickel production dipped 2 percent as output from its new Rim South mine failed to completely offset declines from the closure of the Montcalm operation and restructuring at Sudbury.

Ferrochrome output jumped 149 percent after the sector reopened furnances in response to higher demand after widespread shutdowns during the downturn. (Reporting by Eric Onstad; Editing by Louise Heavens, Mike Nesbit)

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