London - Xstrata, the largest exporter of coal used for power, had the financial flexibility to "seize opportunities" that arose because of the weak economic and market environment, chairman Willy Strothotte said yesterday.
The company was "well-positioned to weather current challenging conditions" and benefit from longer-term commodity demand, Strothotte told a shareholders' meeting in Zug, Switzerland.
In January Xstrata unveiled plans to sell £4.1 billion (R51.4bn) of shares, cut costs and pare net debt to $12.6bn (R105.8bn). The company said it had no "significant" debt refinancing due until 2011, while gearing fell to 30 percent.
Strothotte said the company had the "management structure and financial flexibility to mitigate the risks and seize the opportunities created by current economic conditions".
The stock gained 2.66 percent to £6.555 by 4pm in London.
Under chief executive Mick Davis, Xstrata spent more than $27bn on copper, nickel, coal and platinum acquisitions over the six years before commodity prices plunged last year, when a global economic slowdown curbed demand. The company halted a £5bn offer for platinum producer Lonmin last October as the credit crisis dried up funding for takeovers.
Xstrata said first-quarter coal output rose 7.7 percent to 19.9 million tons after it bought two Colombian mines through the $2bn purchase of Glencore International's Prodeco unit.
Output of coking coal, used to make steel, gained 20 percent to 1.2 million tons after bad weather affected mining a year earlier. Australian thermal coal, used by power stations, rose to $103.50 a ton in the first quarter from $65.30 last year.
Copper output dropped 1.3 percent to 217 092 tons after rains and lower grades cut production in Australia.
Mined nickel production grew 29 percent to 15 203 tons on higher output from Australia and better grades at Canadian mines. This was despite three mines at Sudbury in Canada being temporarily shut and the continued closure of the Falcondo plant in the Dominican Republic.
Refined nickel output fell 25 percent to 21 412 tons after reduced supplies in Norway.
Xstrata is the fourth-largest copper and nickel producer.
Output of zinc concentrate rose 21 percent to 221 729 tons after the Perseverance mine in Canada began production last July. Zinc metal output fell 7.5 percent to 190 310 tons after a temporary shutdown at the Kidd smelter in Canada.
Merafe Resources, Xstrata's partner in a ferrochrome venture in South Africa, said first-quarter output slid 76 percent as smelters were idled in response to weak demand.
Merafe told the JSE that 17 of the venture's 20 furnaces, equivalent to 80 percent of production capacity, remained suspended in the first quarter.
The Xstrata-Merafe venture is the largest ferrochrome producer. The second-biggest supplier, Samancor Chrome, shut all its production last year.
Merafe fell 2.4 percent to close at 80c. - Bloomberg