U.K.-listed, Kazakhstan-focused miner Eurasian Natural Resources PLC (ENRC.LN) Wednesday reported mixed second-quarter output across its commodities, but said demand remains solid.

"Overall, the outlook for demand of our products remains strong despite the challenging market conditions," the company's chief executive, Felix Vulis, said in a statement. "We are pleased to report recoveries in production of both ferroalloys and alumina after problems experienced earlier in the year, as well as a material ramp up in copper production in Africa."

 

Mr. Vulis also said that the recent $600 million purchase of the remaining 75% stake that it didn't already own in Kazakhstan's Shubarkol Komir JSC coal mining company would make a meaningful contribution to the company's earnings.

 

The FTSE-100 listed miner is currently reviewing its operations following a heavy buying spree that pushed the company into a wide array of commodities and geographies including Brazil and the Congo. The company is considering joint ventures or even a demerger of its international assets, and is revising its capital expenditure to take into account the current global economic uncertainty.

 

ENRC said total saleable iron ore product for the three months to June 30 fell 12% on year, to 3.6 million metric tons, while saleable ferroalloys production dropped 1.3%, to 377,000 tons, although it was up 0.5% compared with the first quarter.

 

ENRC's iron division accounted for about 44% of the company's underlying earnings before interest, taxes, depreciation and amortization, or Ebitda, in 2011, and ferroalloys accounted for 34%.

 

Saleable iron ore output dropped due to lower primary iron ore concentrate production stemming from the temporary decline in ore quality as well as repairs to its own railways. Meanwhile, saleable ferroalloys output dropped due to lower high-carbon ferrochrome production on year due to repair works at its two Aksu furnaces, which were completed during the quarter.

 

Second-quarter alumina production dropped 8% on the year to 376,000 tons but rose nearly 14% on quarter after the company resolved problems caused by interruptions to soda ash supply in the first quarter. ENRC said it's now operating at full alumina production capacity. Aluminum production was flat at 62,000 tons. Alumina and aluminum accounted for 10% of ENRC's 2011 Ebitda.

 

Second quarter copper ore extraction increased 14% on year to 418,000 tons but dropped 2.6% compared with the first quarter due to power availability constraints.

 

Lastly, the Energy division boosted its coal and electricity output on a yearly basis in the second quarter, buoyed by Shubarkol's first time contribution and 25 megawatts of additional power generation capacity installed last summer.

 

At 0915 GMT, ENRC's shares were down 0.9% at 389 pence a share, resulting in a market capitalization of GBP5.01 billion.

 

Mining analyst Ash Lazenby said the results looked "solid in ferrochrome [which makes up the majority of ferroalloy sales], but weak in iron ore due to rail availability and decline in iron ore quality."

 

He cautioned that ENRC could face headwinds as benchmark ferrochrome prices are falling in the third quarter.