Xtrata Gets High Thermal Coal Price Xstrata Sets Coal Contracts Above Analysts’ ExpectationsBy Bloomberg · October 18, 2011 · 9:30 am · Leave a Comment By Firat KayakiranXstrata Plc (XTA), which achieved record output of power-station coal in the third quarter, agreed on annual contracts with long-term Japanese customers at prices that exceeded analysts’ expectations.Xstrata settled coal prices at $126.50 a metric ton from Oct. 1, compared with $129.85 on April 1, the Zug, Switzerland- based company said today in a statement.“Considering recent bearishness around commodity prices we consider this an amazing settlement for Xstrata,” Liberum Capital Ltd. said in a note to investors.The Standard & Poor’s GSCI Spot Index of 24 raw materials has dropped 17 percent from this year’s high in April. Copper for three-month delivery on the London Metal Exchange has slumped 28 percent from a record as economic growth in China, the world’s biggest user of industrial metals, slows.Mined copper output declined to 223,606 tons in the quarter from 233,647 tons. Production at the Collahuasi mine in Chile was disrupted by lower ore grades, bad weather and repairs, Xstrata said. Output of copper cathode, the finished form of the metal, dropped 4.5 percent to 163,683 tons.The company reported quarterly thermal-coal output of 20 million tons, the highest ever, compared with 18.5 million tons a year earlier.Shares Drop“The third quarter 2011 marked the end of recent weather- related production impacts on the coal business,” Rob Clifford, a London-based analyst at Deutsche Bank AG, wrote in a note. “On the other side of the ledger, copper production was hampered by more issues at Collahuasi.”Xstrata fell as much as 5.2 percent, the biggest intraday decline since Oct. 4, and traded at 920.1 pence as of 10:30 a.m. in London. Mining companies were the worst performers in the FTSE 100 Index.“With the stock trading below our price target, we maintain our `buy’ recommendation,” Clifford said. He has a share-price target of 1,758 pence for Xstrata.Production of coking coal, used in steelmaking, increased by 26 percent. Total output, including semi-soft coal, rose 7.8 percent to 23.6 million tons.Ferrochrome production dropped 18 percent after scheduled maintenance at furnaces in South Africa was extended, Xstrata said. Ferrochrome producers settled the third-quarter benchmark price at $1.20 a pound, 11 percent lower than the second quarter, because of weaker demand, the company said. The fourth- quarter price was maintained at $1.20 a pound.Output TargetXstrata, seeking to increase overall mining production by 50 percent through 2014 to benefit from growing Asian demand for coal and metals, approved four projects with a total capital cost of about $2.2 billion in the quarter.The company’s five major expansion projects, including Antamina copper and zinc, Collahuasi copper, Koniambo nickel, Antapaccay copper and Ravensworth North thermal coal, are on schedule to start production in 2012, Xstrata said.Nickel production gained 15 percent to 26,738 tons, while output of zinc in concentrate, an intermediate product shipped to smelters, fell 2 percent on lower volumes at Peru’s Antamina mine.“Base metals and coal operations remain on track to deliver a stronger second-half performance compared to first half 2011,” Xstrata said in the statement.