Xstrata predicts renewed commodities boom

Anglo-Swiss mining group Xstrata on Monday reported a 41 percent drop in its annual profit in 2009 and pinned its hopes on a renewed boom in commodities demand in China and other emerging economies.

Xstrata chief Mick Davis predicted that commodities markets would shrug off depressed demand and prices triggered by the financial and economic crisis in 2008 and 2009 and return to a situation where demand would outstrip supply.

Preliminary results released by Xstrata showed that attributable profit minus exceptional items slumped to $2.77 billion (2.02 billion euros) with the global slowdown in industrial production early last year.

A late recovery in commodity prices was offset by the weaker dollar, while improved demand from Asian economies investing in infrastructure was balanced by "a more anaemic response in OECD" economies," Xstrata said in a statement.

Revenue fell 16 percent to compared to 2008, reaching $23.53 billion.

"In my opinion, the medium term outlook for commodity demand remains very promising, driven by the ongoing urbanization and industrialization of high-growth, populous economies, with China and other industrializing countries taking active steps to rebalance their economies towards domestic consumption-led growth over the next decade,” CEO Mick Davis said.

While industrialized OECD economies showed short and medium term signs of recovery, credit expansion was still sluggish there, he added.

But a return to "more normalized" growth in OECD economies would fuel commodity demand, he added.