[miningmx] — GLOBAL diversified miner Xstrata would cut $1bn from its original
capital expenditure planned for 2012, and has so far cut unit costs by a net $105m
as it took “pre-emptive action’ to defend its margins in volatile market conditions.
The company, currently in the midst of a $26bn takeover transaction by major
shareholder, Glencore, on Tuesday reported interim Ebitda earnings of $4bn. That
compares with $5.8bn a year ago and a consensus of analyst forecasts of $3.87bn,
according to Reuters.
“Our financial performance in the first half of the year reflected a cyclical downturn
in commodity prices and the transition to our next generation of lower cost mines,’
said CEO Mick Davis.
“Just as in the previous cyclical downturn of late 2008 and early 2009, we are once
again taking pre-emptive action to ensure our business remains competitive and to
defend margins.’
Davis said identified savings would not only offset in full the group’s expectations of
non-inflation increased unit costs of around $580m for the full year, but would
reduce Xstrata’s operating cost base and improve its competitive position.
“The resultant expected net real cost saving for the year of around $390m, a
creditable cost performance against the very complex operating environment in
2012,’ Davis said.
“Following a review of our project pipeline, we have resequenced capital spending
and deferred $1bn of expenditure originally planned for 2012. Our 2013 budgeted
spending will increase by $400m, with $600m deferred beyond that, without
affecting the commissioning schedule of any of our approved projects.
“Consequently, we expect capital spending in 2012 to reduce to $7.2bn, $1bn less
than our previous guidance, smoothing the profile of capital spending across the
next two years.’
