HomeBase MetalsXstrata results highly creditable

Xstrata results highly creditable

Mick Davis,
Chief Executive,
Xstrata plc
Zug, Switzerland — MININGREVIEW.COM — 30 January 2009 – Despite the economic downturn, Swiss-based mining group Xstrata plc – the world’s fifth- biggest diversified mining group by market value – achieved record annual production of platinum, coking coal, thermal coal, mined nickel, zinc-in-concentrate and lead-in-concentrate during 2008.

Announcing its preliminary results for the year ended 31 December 2008, the company also revealed that record thermal and coking coal and ferrochrome contracts had been settled in the year under review. It added that real cost savings of US$184 million (R1.9 billion) had been achieved through productivity improvements, despite ongoing cost pressures

Xstrata CEO Mick Davis commented: “Despite the sudden and severe impact of a global banking crisis that dramatically slowed economic growth from the third quarter and led to a precipitous fall in commodity prices, Xstrata’s businesses achieved a highly creditable result in 2008, generating EBITDA of $9.7 billion (R97 billion), and achieving 11% lower than the record profitability in 2007. Earnings per share of $4.90 were 13% lower than the prior year,” he added.

“The impact of markedly lower commodity prices in the final quarter was largely offset by the benefit of record thermal and coking coal and ferrochrome contracts settled during the year, together with robust copper prices for the majority of 2008,” said Davis.

“Our businesses have acted promptly and decisively in response to sudden lower demand for key commodities, and have conserved cash during a period of heightened uncertainty by: suspending or closing higher cost or unprofitable production; aligning production with reduced demand; redoubling efforts to drive down operating costs and tightly control working capital; and substantially reducing discretionary sustaining and expansionary capital expenditure,” he emphasised.

“Xstrata continues to operate a suite of cash generative operations across a broad range of geographies, with excellent growth potential and a strong competitive position in each of its key commodity markets, he concluded. “ I am confident that the prospects for Xstrata remain very encouraging.”