Production increased by 4% to 40 million tonnes during the first half of 2008, due to higher volumes of semi-soft and coking coal, up 22% and 39% respectively over the first half of 2007, and stable thermal coal production.

New South Wales operations prioritised higher-margin semi-soft coal production at the expense of growth in thermal coal production.

Semi-soft production also benefited from the inclusion of the recent Resource Pacific acquisition.

Xstrata said lower thermal coal production in NSW was offset by improved operational performance at Cerrejón in Colombia, as the operation ramps up to an annual run rate of 32Mt.

Despite extreme storms in Queensland, coking coal production was boosted by improved performance from the Oaky Creek longwalls and the inclusion of the recently acquired Tahmoor operation in NSW.

Production during the second quarter recovered strongly from adverse weather conditions in Queensland, Australia and in South Africa in the first quarter, which impacted all opencut coal producers.

While the bad weather is behind thermal coal operations in South Africa, the electricity crisis continues to impact operations with supply still restricted to 90% of normal supply.

During the first half the expansion of the Mount Owen coal handling and preparation plant and the commissioning of the new Southstock 5-seam underground mine were completed.

Xstrata said several products currently underway would start to deliver growth from the second half of the year, including the new Liddell coal handling and preparation plant and the ramp-up of Cerrejón.

The company also highlighted the acquisitions of Resource Pacific and Tahmoor as providing future growth.