Xstrata’s profit plunges 37% in 2012

Anglo-Swiss miner Xstrata Plc, which is being merged with global commodities giant Glencore International Plc in a $67-billion deal, has reported a 37-per cent slump in its attributable profit for the year 2012 due to lower commodity prices and rising costs.

The company's profit, excluding exceptional items, fell to $3.65 billion from $5.78 billion a year ago, pulling down revenue by 7 per cent to $31.6 billion.

During the year, the miner incurred impairment charges of $2.6 billion related to its stakes in troubled South African platinum miner Lonmin, and over assets including its Australian zinc and nickel operations . The net income including exceptional items were 79 per cent lower at $1.2 billion compared to last year.

Xstrata's chief executive officer Mick Davis said, ''The combined impact of falling commodity prices, ongoing inflationary pressure on operating costs and continued strong producer currencies relative to the US dollar put pressure on our margins.

''2012 was a transformational year for Xstrata across a number of fronts. The development of our project pipeline reached its zenith in 2012 with ten major projects entering commissioning,'' Davis said.

According to analysts, Xstrata's write-down is relatively small compared with other miners such as Anglo American and Rio Tinto.