Xstrata shows recovery from earlier floods

Xstrata reported record thermal coal production in the third quarter and a more than 7 per cent rise in overall coal output, due to the start of operations at its Mangoola mine in Australia and recovery from a flood-hit start to 2011.

The miner's copper output, however, left some investors disappointed with a 4 per cent dip in the quarter, after production was dented by the impact of lower grades, repairs and blizzard conditions at its Collahuasi mine in Chile.

"It was a pretty solid coal performance and the coal prices are better than feared, but the copper business just continues to be weak," Tim Dudley, an analyst at Collins Stewart, said.

Declining ores and interrupted supply – problems seen across the copper industry – also hit copper production at Xstrata's rival Rio Tinto, which missed output forecasts last week.

Copper is the most profitable product for Xstrata, with coal ranking second. Both commodities are key planks of Xstrata's growth strategy, with supply issues expected to hold up copper prices, while Chinese and Indian demand is expected to support thermal coal prices.