Xstrata Plc (XTA), the largest exporter of power-station coal, said first-half profit rose 27 percent after commodity prices advanced. Net income climbed to $2.92 billion, from $2.29 billion a year earlier, the Zug, Switzerland-based company said today in a statement. Sales gained 23 percent to $16.8 billion. Xstrata proposed an interim dividend of 13 cents. “Average prices for all of Xstrata’s commodities rose above the first half of 2010,” Chief Executive Officer Mick Davis said in the statement. A stronger second-quarter performance offset production disruptions caused by weather in the first three months, he said. The average price of power-station coal at Australia’s Newcastle port, a benchmark for Asia, rose to $124 a metric ton in the first half from $97 a year earlier, according to McCloskey Group. Copper, Xstrata’s other main product, averaged $9,401 a ton, up 30 percent. Xstrata, which also produces zinc, nickel and ferroalloys, is seeking to increase overall output by 50 percent through 2014 to benefit from growing Asian demand. The company will focus on organic growth projects, while not ruling out acquisitions, Davis said in February. It agreed last month to buy Canadian miner First Coal Corp. for C$147 million ($154 million). Canadian Expansion Xstrata approved two Canadian nickel projects totaling $649 million, it said today. Its development of the $530 million Raglan extension project in northern Quebec and the $119 million Fraser Morgan project in Sudbury, Ontario, will now proceed, it said in a separate statement. Earnings before interest, tax, depreciation and amortization increased 30 percent to $5.82 billion, missing the $5.93 billion average estimate of 10 analysts surveyed by Bloomberg. Profit excluding one-time items climbed to $2.87 billion from $2.3 billion a year earlier. Raw material and power-price increases drove up first-half production costs, Davis said. The Australian dollar’s strength against the U.S. dollar reduced operating profit by about $765 million, he said. Xstrata increased the estimated capital cost for the Koniambo nickel project in New Caledonia to $5 billion from the $3.85 billion it approved in 2007, today’s statement shows. Xstrata’s share of the cost is $4.6 billion, it said. Koniambo, which is 76 percent complete, will begin production in the second half of next year, Xstrata said. To contact the reporter on this story: Firat Kayakiran in London at fkayakiran@bloomberg.net To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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