Mining group Xstrata said it would pump over $5bn (£3.14bn) into new mines and keep targeting organic growth rather than acquisitions, after more than doubling first-half earnings per share on higher metals prices.
Xstrata – the world's biggest exporter of coal used in power plants – said it had approved $4.2bn to build the Las Bambas copper mine in Peru and $1.1bn for the Ulan West coal project in Australia. "In total, 15 major growth projects are now approved and in the construction phase, representing a total of $14bn of capital investment," Chief Executive Mick Davis said.
"These projects alone will deliver substantially all of our expected 50 per cent increase in overall volumes by 2014."
Davis said he was wary about the short-term, but bullish about the medium term outlook, echoing the views of peers.
"The short term outlook for macro-economic conditions remains mixed, with a 'three-speed' global economy likely to persist for the foreseeable future," he said.
"We remain very confident in the buoyant outlook for Xstrata's commodities in the medium term... the developing economies, led by China, Brazil and India, are set to continue to provide the main driver of demand growth for our products."
Xstrata said EPS for the first six months of the year rose to 79 cents from 38 cents in the same period last year. This compared with a consensus forecast of 76 cents, based on estimates of 11 analysts compiled by the company.
Earnings before interest, tax, depreciation and amortisation (EBITDA) gained 67 per cent to $4.49bn, slightly shy of the consensus at $4.56bn.
Xstrata posted slightly weaker first-half output than expected last week, including a 3 percent dip in copper output.
City A.M. Reporter