Xstrata this week reaffirmed its acquisitive streak with a $1-billionoffer for South African platinum miner Eland, and the purchase of 50% of a thermal coal mine in Australia.
The news came as the Anglo-Swiss mining giant posted a 20% rise in first-half sales to $14,2-billion, with a 27% increase in profit before interest and tax to $4,7-billion.
But the group was the biggest faller on the FTSE 100. Its shares closed down 59p, or 2%, at £28,72 as results were slightly below expectations and cost pressures weighed on the company. Analysts were also concerned about the group’s ability to deliver its ambitious project pipeline.
The offer for Eland, which significantly improves the group’s exposure to platinum, tops an active time for Xstrata. In 2006 alone, it spent $22-billion on mining assets. Mick Davis, Xstrata’s chief executive, was keen to stress the transformation of the group into a diversified miner with strong organic growth opportunities. He said: ‘The transformation of Xstrata is especially apparent in the number and the quality of internal growth projects in the group.”
The company said it expected to increase production by 12% a year between now and 2013, helped by $28-billion of capital projects.
However, there was some disquiet about whether Xstrata would be able to deliver on such a large number of projects. Simon Toyne, an analyst at Numis Securities, said: ‘Their project delivery so far has been strong, but they’re not used to delivering that number of projects and that number of commodities simultaneously.” —