core sector communique

Zug, 2 August 2011

XSTRATA PLC ANNOUNCES HALF-YEARLY RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2011

Key Financial Results

$m		Six months to 30.06.11	Six months to 30.06.10	% Change
Revenue		16,777	13,608	23
Operating EBITDA*		5,820	4,494	30
Operating profit*		4,246	3,236	31
EBIT*		4,254	3,234	32
Attributable profit*		2,865	2,299	25
Attributable profit		2,916	2,288	27
Earnings per share (basic)*		$0.98	$0.79	24
Earnings per share (basic)		$1.00	$0.79	27
Dividends declared and paid per share		20.0¢	8.0¢	150
Dividends proposed per share		13.0¢	5.0¢	160
Net debt to net debt plus equity		15%	19%	21
Net assets		45,533	35,233	29
Net assets per share**		$15.53	$12.13	28
* **	Excludes exceptional items Excluding own shares

Highlights

§ Operating profit 31% higher to $4.25 billion, attributable profit up 25% to $2.9 billion

§ Ongoing focus on cost reduction initiatives in an inflationary environment achieved $52 million of real unit cost savings

§ Rapid recovery at flood-affected mines and newly commissioned operations compensated for weather-related and other one-off production impacts in the first half

§ Robust operational momentum in second quarter to deliver substantially stronger second half

§ Substantial increase in interim dividend to 13¢ per share, reflecting confidence in the medium term outlook and a progressive dividend policy rebased at pre-financial crisis levels

§ 21% reduction in total recordable injuries per million hours to 5.5

§ Growth strategy on track to achieve 50% growth target by end of 2014

§ Mangoola and ATCOM East thermal coal projects and incremental Raglan expansion successfully reached commissioning on time and on budget in first half

§ Five major projects approved to date in 2011

§ All projects remain on schedule, Koniambo cost estimate revised to $5 billion (Xstrata’s share $4.6 billion)

§ A number of complementary acquisitions announced during the period to augment Xstrata’s growth portfolio including:

- Xstrata Copper’s AUD175 million ($186 million) acquisition of two copper projects from Exco Resources

- Xstrata Zinc’s acquisition of the Hackett River and Wishbone exploration properties in Canada

- Acquisition of the outstanding 25% interest in the Lady Loretta zinc-lead deposit near Mount Isa, and proposed acquisition of Minco’s 23.6% interest in the Pallas Green project, Republic of Ireland

- Xstrata Coal’s CAD147 million ($153 million) all-cash proposal for First Coal Corporation of Canada.

Mick Davis, Xstrata plc Chief Executive Officer commented:

“A substantially stronger financial performance in the first half reflected growing demand for our products from emerging Asian economies and recovering Western markets, together with a pleasing recovery of operational performance in the second quarter following one-off events which hampered first quarter production. In view of our strong financial performance and confidence in the medium term outlook, the Board has proposed a proposed interim dividend of 13 cents per share, a 160% increase over the interim dividend last year.

“In 2011 we again successfully delivered new, lower cost volumes into our portfolio. Twenty-two projects are currently in implementation, representing capital expenditure of $15 billion. We remain on track to deliver a 50% increase in copper-equivalent volumes by the end of 2014 and 80% of this volume growth is already accounted for by approved and completed projects. A total of eight new projects will start production in 2011.

“As activity ramps up across the global mining industry to respond to robust market conditions, input costs are rising sharply. Growing demand and tighter availability are leading to increasing electricity and fuel prices, higher costs for key consumables including raw materials, fuel and steel and steep year-on-year increases in labour rates. Compounding the challenge, the persistently weaker US dollar against the majority of producer currencies - in particular the Australian dollar - has exacerbated the impact on US dollar-denominated costs.

“Despite the substantial headwinds of inflationary pressures and adverse foreign exchange rates, our businesses achieved real unit cost savings of $52 million in the first half of the year and we maintained EBITDA margins at pre-financial crisis levels of around 35%. Set against the inexorable creep of rising costs at ageing operations, including a $54 million impact in the first half from lower nickel and zinc grades, this cost performance is all the more impressive.

“In summary, we delivered robust earnings despite a number of one-off impacts to our operations in the early part of the year. Our recovery has been swift and robust and we are now operating with good momentum to deliver a substantially stronger second half. Strong cash generation from our operations and a robust investment grade balance sheet with significant headroom position Xstrata to deliver our strategy from our own resources, with the flexibility to return cash to shareholders through an increased dividend and pursue value-creating opportunities should they arise. As global economies continue to improve, Xstrata is well positioned to continue to deliver value to our shareholders.”