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Glencore Xstrata Q1 results show solid performance from metals division

13th May 2013

By: Natalie Greve

Creamer Media Contributing Editor Online

  

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JOHANNESBURG (miningweekly.com) – The newly merged Glencore Xstrata group on Monday posted combined first-quarter 2013 production results, which saw the metals and minerals division delivering solid results, despite some softening in prices towards the end of the quarter.

The energy divisions – comprising coal and oil – saw markedly improved profitability during the first quarter, while agricultural products made a slow start to the year, in what was often a seasonally weaker quarter.

Metals and Minerals
The group’s total own-sourced copper production was up 18% over the prior year to 321 800 t, primarily reflecting strong growth from the Antapaccay, Katanga, Mount Margaret and Mutanda operations, which benefited from their respective expansion plans.

African copper produced 83 600 t of copper in-metal and in-concentrate from own sources during the quarter, a 44% increase compared with the first quarter of 2012, with Mutanda and Katanga the primary drivers of this growth.

Total own-sourced zinc production amounted to 386 900 t for the three months, which was broadly in line with the first quarter of the prior year.

This reflected an 11% growth in own-sourced zinc production from Australia, as well as the contribution of the Rosh Pinah acquisition, and was offset by the wind-down of the North America-based Brunswick and Perseverance operations.

The group improved its nickel production by 4% year-on-year to 25 500 t for the period, which was chiefly driven by higher production at the Western Australia-based Murrin Murrin nickel/cobalt operation, reflecting consistent plant availability and the impact of the planned acid plant shutdown during the first quarter of 2012.

Gold production also saw an upswing, with 578 000 oz produced during the period, up from 531 000 oz in the comparable prior year’s quarter. The average received gold price, however, dipped by 3% to $1 632/oz from $1 691/oz in the prior comparable period.

Energy
The group’s coal division, meanwhile, reported total output of 32.7-million tonnes in the first quarter, which was broadly consistent with the comparable 2012 period.

Thermal coal production from the company’s South African operations amounted to 10.7-million tonnes, an 11% reduction over the comparable period, which was attributed to lower production at the Tweefontein underground complex, owing to “difficult” mining conditions, as well as a short-term decline at Umcebo, as existing production units approached the end of their mine life and attention shifted to development projects.

“South African coal expansion and development projects are progressing well,” Glencore Xstrata said in a results statement on Monday.

“Definitive feasibility studies relating to the Springboklaagte and Argent projects will be completed in May, while the Pullenshope project is substantially complete, with first coal extracted and production ramping up. Licensing for the Koornfontein project is expected shortly with construction expected to start thereafter.”

In addition, the Alen oilfield development project in Block O, in Equatorial Guinea, was nearing completion and remained on track to add to the company’s energy production profile by the third quarter of the year.

The offshore Aseng oilfield, in Equatorial Guineau, had continued to perform well through the first quarter of 2013, averaging some 60 000 bbl/d for the quarter.

Mining Weekly reported last week that integration initiatives to incorporate the two mining majors were underway, with clear leadership and reporting lines already in place and an industrial asset portfolio review in progress.

The group had assigned a $500-million budget to “synergise” the two entities, with $450-million allocated for marketing optimisation and $50-million for associated merger costs.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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