Xstrata sees new commodities boom

ANGLO-SWISS mining group Xstrata yesterday reported a 41 per cent drop in its annual profit in 2009 and pinned its hopes on a renewed boom in commodities demand in China and other emerging economies.

Xstrata Chief Executive Mick Davis predicted that commodities markets would shrug off depressed demand and prices triggered by the financial and economic crisis in 2008 and 2009 and return to a situation where demand would outstrip supply. Preliminary results released by Xstrata showed that attributable profit minus exceptional items fell to US$2.77 billion with the global slowdown in industrial production early last year.

A late recovery in commodity prices was offset by the weaker dollar, while improved demand from Asian economies investing in infrastructure was balanced by "a more anaemic response in OECD" economies, Xstrata said in a statement.

Revenue fell 16 per cent compared to 2008, reaching US$23.53 billion.

Davis said: "In my opinion, the medium-term outlook for commodity demand remains very promising, driven by the ongoing urbanisation and industrialisation of high-growth, populous economies, with China and other industrialising countries taking active steps to rebalance their economies towards domestic consumption-led growth over the next decade."AFP