Xstrata Coal produced 18.5 million tonnes of coal for the first quarter from its Australian, South African and American operations, down 4% on the 2007 first quarter. The company attributed the drop primarily to lower Australian thermal coal production.

Force majeure was declared on a number of contracts from the Newlands-Collinsville-Abbots Point complex and Rolleston operations in mid-February. By March 8, Rolleston had lifted force majeure on all contracts with production now at normal levels. Xstrata said the situation remained "under review" at the NCA complex.

In NSW, Xstrata switched production from thermal to higher value semi-soft coking coal, resulting in an increase of more than 40% in semi-soft production and a slight decline in thermal production compared to the first quarter last year.

Australian coking production was 200,000t lower than in the previous year, predominantly due to the timing of longwall moves at the Oaky Creek complex.

Lower production of thermal coal at its South African operations due to heavy rains in January was more than offset by increased production at the Cerrejón mine in Colombia.

Cerrejón is expected to ramp up to reach output of 32Mt per annum by mid this year.

Looking ahead, Xstrata has settled thermal coal contracts for the Japanese 2008-09 financial year at $US125/t, up 125% on last year.

The company's hard coking coal contracts are yet to be settled; however, spot prices for premium coking coal continue to trade at record levels.

Xstrata said it was confident contract prices in 2008 would significantly exceed prices achieved in 2007.