Tax worries overshadow Xstrata's increased output

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The Independent Online

Xstrata reported strong first-quarter production figures yesterday, saying it was confident about demand for metals as the recovery in the global economy gathers pace.

But the strong data could not prevent the continued slide of the group's shares after the Australian Prime Minister reaffirmed his intention to impose a 40 per cent tax on miners groups operating in the country. The Anglo-Swiss company's shares closed down 0.9 per cent at 992p.

A buoyant Chinese economy and recoveries in other industrialised nations have led to increased demand for Xstrata's coal and copper, its most profitable commodities.

In the first quarter, copper prices more than doubled and zinc jumped by 95 per cent, but coal prices were slightly weaker, Xstrata said.

The production update followed those of a number of London-listed miners in recent weeks. BHP Billiton said production of several commodities had dipped, while Rio Tinto said copper production was down by 16 per cent.

Xstrata's update came after Kevin Rudd, the Australian Prime Minister, reiterated his intention to levy a 40 per cent "Henry tax" on mining companies. After what was described as a "forthright" meeting with company executives yesterday, Mr Rudd said he would press ahead with the planned levy.