Plcs core earnings fell 30.4 percent year on year in 2012
due to lower commodity prices and stronger currencies.
"Our businesses faced difficult
operating conditions during the year, as the combined impact of
falling commodity prices, ongoing inflationary pressure on
operating costs and continued strong producer currencies
relative to the U.S. dollar put pressure on our margins," chief
executive officer Michael "Mick" Davis said.
Earnings before interest, taxes,
depreciation and amortization (Ebitda) fell to $8.1 billion
from $11.7 billion in 2011 on revenue that dropped 6.7 percent
to $31.6 billion. This excluded exceptional items of $2.6
billion for a write-down on Xstratas investment in
London-based Lonmin Plc ($840 million), as well as the
Brunswick zinc mine in Canada and the Cosmos nickel mine in
Australia as they reached the end of their operational lives.
Additional write-downs in response to adverse market conditions
in South Africa totaled $978 million.
At the same time, 10 major
projects entered commissioning in 2012. They included Xstrata
Coppers Ernest Henry Mining, which processed its first
ore in September and will add around 30,000 tonnes of copper
concentrates production annually. The Antamina copper-zinc
joint venture in Peru was also commissioned in the first half
of 2012 and is expected to increase output this year.
"Despite a peak capital
expenditure of $10.3 billion in 2012, our balance sheet remains
robust, with net debt at year-end at $14.7 billion and gearing
at 24 percent," Davis added.
The Zug, Switzerland-based
company plans to commission a number of new projects in 2013,
including the Fraser Morgan nickel mine and the Bracemac-McLeod
zinc operation in Canada, it said.
Xstrata realized $176 million in
cost savings last year, mainly through a combination of
cost-efficiency initiatives and the benefit of increased
volumes in its coal and zinc businesses.
Separately, Xstrata said the
completion date for its merger with Baar, Switzerland-based
Glencore International Plc has been pushed back to April
"Completion of the merger
remains conditional upon the receipt of the outstanding
regulatory approval in China and completion of the Xstrata
court process," the company said.
Looking ahead, "a gradual global
recovery appears under way, particularly in China and the
(United States)," Davis said. "Chinese fiscal policy easing and
clear statements by the U.S. Federal Reserve regarding their
intention to continue stimulating the U.S. economy have boosted
confidence in these economies and are supportive of a
marginally improved environment for commodity demand in
A version of
this article was first published by AMM sister publication