Mining firm posts 13% profit

Mining company Xstrata has posted a 13 per cent profit rise to $5.5 billion (£2.77 billion) for 2007 on increased production and strong demand for commodities.

Earnings per share rose to $5.78 (£2.71), nine per cent higher than the previous year. Xstrata also said talks with Brazilian mining company Vale were ongoing but did not go into detail on the potential takeover.

Robust commodity prices and record production at Xstrata's coal, nickel, ferrochrome, platinum and zinc mining operations, coupled with a strong second half performance at the copper operations, boosted revenue by 12 per cent compared to last year, according to the company.

Higher commodity prices added over $1.3 billion (£655 million) to earnings before interest during the period.

Xstrats's chief executive, Mick Davis, was optimistic over the company's outlook despite a US economic slowdown. He said: "With China's urbanisation ratio approaching 45 per cent, rapid income growth, high savings rates and the urbanisation of around 15 million people annually, the bulk of Chinese demand is driven by internal factors.

"We expect this demand, coupled with that from India, Russia and a number of south-east Asian economies, to fuel robust growth in global demand for commodities into the medium term."

Revenue rose 12 percent to $28.54 billion (£13.49 billion), despite several incidents over the year including earthquakes in north Chile and tropical storm Noel in the Dominican Republic.

Vale said last week any future acquisition of Xstrata depends on the company's main shareholder Glencore and its stance over marketing rights.