Xstrata Plc, the world’s largest exporter of coal used in power stations, expects commodity prices to rise as Europe resolves its sovereign debt crisis.

Mr Peter Freyberg head of Xstrata’s coal division told reporters in London that “When we get out of this uncertainty that Europe and the rest of the world is causing us we’ll see some significant price improvements. India and China continue to grow. We remain, in the six-month period, positive.”

Demand for commodities such as coking coal the company digs at Australia’s Oaky Creek is high in China, Mr Freyberg said that “We’re seeing steel demand going down, prices in China dropping, but there’s still good demand for quality products and prices historically are still high, well over USD 200 a tonne.”

Mr Mick Davis CEO in a briefing at Investor Day in London said that The company is seeking to deliver significant cost reduction across its output.

Mr Davis said that “Xstrata will continue its progressive dividend policy. We had a significant adjustment in dividend to get back to pre 2008 level, and we’ll continue with that policy.”

The company isn’t happy with this year’s performance at Collahuasi, its Chilean joint venture with Anglo American Plc, he added that “Collahuasi hasn’t been a great deliverer this year. It’s been a disappointing exercise.”

The company, planning USD 19.5 billion in spending from next year to raise output 50% by the end of 2014, sees demand for coal and copper above supply after delays in new projects.

(Sourced from Bloomberg)