May 6 (Bloomberg) -- Xstrata Plc, the world's largest exporter of coal used by power plants, said first-quarter output fell 3.6 percent after floods cut supplies from Australian mines.

Production dropped to 18.5 million metric tons from 19.2 million tons a year earlier, Zug, Switzerland-based Xstrata said today in a statement. Copper output advanced 1.8 percent to 219,978 tons, while nickel slid 15 percent to 11,785 tons.

In February, Xstrata advised customers of delays to deliveries from two mines in Queensland. Monsoon rains in the state's Bowen Basin also hurt output at rivals including BHP Billiton Ltd. and Rio Tinto Group, helping to push spot prices for coking coal to records.

The financial and operational outlook for 2008 remains ``very positive,'' Xstrata said.

Xstrata rose 113 pence, or 2.7 percent, to 4,304 pence in London, the highest closing price since the shares started trading in 2001. The stock has gained 21 percent this year, valuing the company at 42 billion pounds ($83.1 billion).

Supplies of thermal coal for the 2008-09 Japanese contract year were settled at $125 a metric ton, Xstrata said. Contract prices for coking coal used in steelmaking, which Xstrata hasn't settled yet, will ``significantly exceed'' 2007 levels.

Last month, Asian steelmakers agreed to triple to $300 a ton the price paid to BHP and Mitsubishi Corp. for coking coal. While Xstrata lifted the force majeure at its Rolleston mines in March, the situation remains ``under review'' at the Newlands complex, the company said today. Force majeure is a clause that allows companies to miss deliveries because of circumstances beyond their control.

Copper Driver

Chief Executive Officer Mick Davis has lifted Xstrata's sales more than 15-fold in five years through acquisitions and expansions in copper, nickel and coal. Copper made up 46 percent of 2007 earnings before interest and tax, nickel 24 percent, zinc 17 percent and coal 8 percent, Xstrata said in March.

Copper output at the Collahuasi mine in Chile increased despite adverse weather conditions, due to improvements to equipment, Xstrata said. The company owns the mine, its largest, alongside Anglo American Plc.

A six-year rally in copper driven by increased demand from nations including China, the largest user, and curbs in supply helped boost Xstrata's profit 13 percent last year. The company, whose biggest shareholder is Swiss commodity trader Glencore International AG, is the world's fourth-largest copper producer.

Nickel Decline

Mined nickel output fell because of bad weather in northern Canada and the planned shutdown at the Raglan mine, Xstrata said. The company added 800 tons of nickel during the quarter from the Jubilee Mines NL acquisition in Australia.

Production of zinc fell 4.2 percent to 205,682 tons because of equipment failure at the San Juan de Nieva plant in Spain, Xstrata said. Lead concentrate production from Mt. Isa mines in Australia jumped 21 percent to 64,572 tons as it recovered from production problems a year earlier.

Xstrata's output of alloys, including ferrochrome, advanced 4.5 percent to 305,000 tons following the return of previously idled capacity in South Africa, the company said. The benefit was partially offset by reduced electricity supply from Eskom Holdings Ltd. as a result of the national energy shortage.

To contact the reporter on this story: Brett Foley in London at bfoley8@bloomberg.net

Last Updated: May 6, 2008 12:10 EDT