Xstrata PLC (XTA.LN) Tuesday reported an increase in total coal production in the first quarter of the year as the Anglo-Swiss miner also reconfigured some operations and paid down debt during the global economic slowdown.

Total consolidated coal production was up 7.7% to 19.9 million metric tons in the three months to March 31 from 18.5 million tons during the same period a year earlier. Newly acquired Prodeco operations in Colombia boosted thermal coal output while production at its South African operations was down by 15% year-on-year, Xstrata said.

Mined copper output decreased 1.3% to 217,092 tons from 219,978 tons.

Coal and copper are the biggest earnings drivers for the FTSE100 miner, accounting for about 44% and 33%, respectively, of earnings before interest, taxes, depreciation and amortization, or Ebitda, last year.

One London-based analyst, who asked not to be named, said the quarterly report reflected a "tough" quarter, with South African coal particularly disappointing.

Xstrata also produces ferroalloys, nickel, platinum, zinc and lead at operations around the world.

"Thermal and coking coal, nickel, platinum, zinc in concentrate and lead metal production volumes increased in the first quarter compared to the same period in 2008," the company said in a statement.

The group's management statement highlighted moves to reconfigure operations during an ongoing economic downturn, including scaling back chrome, some nickel production and temporarily halting some metallurgical copper operations at Kidd Creek.

The miner said it had suspended 80% of capacity at its Xstrata-Merafe chrome venture. Chrome production fell by 76% in the quarter.

Xstrata last month said it would defer starting underground operations at its Australian Sinclair nickel mine, and would place the mine on care and maintenance from August due to market conditions.

Also, the miner in February said it would close mining operations, defer a project and cut capital expenditures at its Canadian nickel mine operations in Sudbury as part of a restructuring in response to ongoing challenging market conditions.

Total mined nickel production in the first quarter of 2009 increased by 29% to 15,203 tons, Xstrata said.

Xstrata earlier this year also raised GBP4.1 billion in a 2-for-1 rights issue to cut debt. "Xstrata has no significant debt refinancing requirements until 2011," the company said.

Xstrata acquired Prodeco from its biggest shareholder, Glencore International AG for $2 billion as a component of the rights issue package.

Xstrata's shares closed at 638 pence Friday, up more than 76% since the start of the year.

Company Web site: www.xstrata.com

-By Jeffrey Sparshott, Dow Jones Newswires; +44 (0)207 842 9347; jeffrey.sparshott@dowjones.com
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