Xstrata’s Australian thermal coal business achieved an operating profit of $544 million for the first six months of 2012, 21% higher than the same period last year.

This was mainly due to increased production following the commencement of the Ravensworth North and Ulan West box cut, recovery from water impacts at Ulan and flooding at Rolleston in early 2011, as well as a full six months of steady state production at Mangoola.

Increased tonnes from its low cost Mangoola and Rolleston mines contributed to real unit cost savings in the first half, the company said.

The full impact of the favourable volume and unit cost variances were partly offset by inflationary cost increases and higher depreciation and amortisation costs associated with higher production.

Australian coking coal’s operating profit decreased by 43% or $165 million to $217 million. Despite higher volumes in 2012, earnings were adversely impacted by lower average realised prices compared to 2011, when significant contract price increases were realised in response to supply constraints caused by the Queensland floods.

Earnings were also impacted by unit cost increases resulting from geological issues encountered at the Oaky Creek underground mining complex in 2012, as well as industry-wide inflationary cost increases predominantly for labour and fuel.