Glencore Xstrata to cut $2bn in costs

Glencore Xstrata to cut $2bn in costs

Ivan Glasenberg, chief executive, said he expects costs saving of at least $ 2bn (£1.27bn) in 2014 – four times the initial estimates when the deal was announced last year and enough to push the shares up 7.45 to 328¾p.

“There is still more to come … We have not really gone deep into the asset side,” he said in his first detailed presentation since Glencore took a $ 7.7bn impairment charge on Xstrata’s assets last month.

Of the synergies, Mr Glasenberg said $ 1.4bn would come from cost savings and the rest from marketing synergies and reduced borrowing costs. Glencore said it would incur $ 255m of implementation costs in 2013.

The bulk of savings have come from the closure of 33 offices in three months and slashing almost half of Xstrata staff at divisional and headquarters offices.

The coal operations that have faced falling prices and oversupply in the market also suffered $ 576m in cuts.

The company plans to cut capital expenditure by $ 3.5bn by 2015 and hold spending to sustain operations at $ 4bn.

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