Kazakhmys copper output falls 20 percent

LONDON (Reuters) - Kazakh miner Kazakhmys (KAZ.L) posted a 20 percent fall in first-quarter copper cathode production from the previous quarter as part of its stated move to cut output this year, but said demand from China has been above expectations.

Total copper cathode equivalent output, which includes cathode equivalent in concentrate, declined to 85,600 tonnes for the FTSE-100 miner in the first three months of 2009, from 106,600 tonnes in the previous quarter.

Better weather conditions helped copper cathode production climb from 84,100 tonnes in the year-earlier quarter.

"At the end of 2008 we stated that we would reduce output in 2009, by suspending production at some higher cost mines, and this is reflected in these results," said Chief Executive Oleg Novachuk on Thursday.

Kazakhmys plans to cut copper cathode production this year to about 300,000 tonnes, from 378,100 tonnes in 2008, in response to lower demand.

The company said it suspended production at sections of a fifth mine in addition to four mines previously announced.

Copper prices rose nearly a third in the first quarter and are up almost 45 percent from the end of 2008 on strong demand from China, the world's biggest user of the metal.

"It's not just about price level it's about sustainability," spokesman John Smelt told Reuters on Thursday regarding the possibility of mines being re-started due to higher prices.

"Taking operations on and off line is a reasonably complicated business so you wouldn't do it unless you really knew that they were going to stay on," he said.

The company said copper demand and prices have been encouraging in the first few months of this year but that it will continue to focus on cash preservation.

The group's net debt was $1.645 billion (1.1 billion pounds) at end March 2009, compared with $1.628 billion at Dec 31.

Copper cathode sales were higher than production in the first quarter as the company reduced stock levels.

Liberum Capital called the production figures strong.

At 9:45 a.m. British time, the shares were up 5.4 percent at 536 pence, while the mining index .FTNMX1770 was up 2.8 percent.

Also on Thursday, Anglo American (AAL.L) posted weaker first-quarter output in most of its commodities. This followed similarly weak production reports from rivals BHP Billiton (BLT.L) (BHP.AX), Rio Tinto (RIO.L)(RIO.AX) and Vale (VALE5.SA) (RIO.N).

(Reporting by Julie Crust; editing by Matt Scuffham and Hans Peters)