The Anglo-Swiss company, which has seen its share price drop to a seven month low on the London Stock exchange, was also adversely affected by the floods in Queensland, according to Bank of America Merrill Lynch analyst Jason Fairclough.
“Coal in particular was impacted by flooding in Australia and a fire at the Blakefield South mine,” he said.
“We are lowering our earnings forecasts for Xstrata on lower assumed coal production (weather impacted), lower assumed coal price realisations and higher assumed mining cost inflation.”
Merrill has downgraded Xstrata’s 2011 earnings per share estimate by 20% and the 2012 figure by 12% and its full year net income estimate for Xstrata in 2011 to $US7.3 billion.
Earnings reported by Glencore International AG, a major shareholder in Xstrata, also suggested a weak first quarter, according to Fairclough.
The world’s largest commodities trader, Glencore came in under analysts’ forecasts when it posted first quarter profit of $1.3 billion on June 14.
The majority of the Blakefield South workforce has been redeployed to other Xstrata mines, such as Ravensworth North and the nearby Beltana mine in the Upper Hunter Valley.
Blakefield South was designed to replace Beltana, which was an Australian longwall production leader for several years.
While Beltana was scheduled to cease mining at the end of 2010, the last panel is still being extracted.
Blakefield South’s new longwall was commissioned in June and production capacity was estimated to be around 4 million tonnes per annum in December.