Xstrata says net profit drops by 77 per cent

Mining company Xstrata said net profit fell 77 per cent in the first six months of the year as a result of lower commodity prices, and reiterated that its merger offer to rival Anglo American would be "highly compelling" to both sets of shareholders. Xstrata's profit tumbled to $643 million (U.S.), compared with $2.78 billion in the same period last year. Revenue fell 39 per cent to $9.87 billion. Earnings for the Anglo-Swiss company based in Zug, Switzerland, reflect the adverse market conditions, as base metal prices slipped by up to 57 per cent. Thermal coal, mined nickel, zinc and copper held up better, somewhat offsetting closures of unprofitable, high-cost operations and lower demand for ferrochrome, ferronickel and coking coal. Real costs were cut $119 million in the first-half of the year.