MINER trader Glencore Xstrata delighted the market yesterday when it said that synergies from this year’s merger would hit at least $2bn (£1.3bn) next year, skyrocketing far beyond initial guidance of $500m.
Chief executive Ivan Glasenberg said that a significant proportion of the synergies would come from cutting costs at head and regional offices, with potentially more to come.
“We are only just starting to comprehensively look at the combined mining and metallurgical operations,” added Glasenberg.
Commodities trader Glencore’s £30bn takeover of miner Xstrata came to fruition at an inopportune time in the market cycle, with low commodities prices causing the company to write down $7.7bn of Xstrata’s assets last month.
The FTSE 100-listed firm said that it plans to reduce capital expenditure during 2013 to 2015 by $3.5bn – excluding the Las Bambas copper mine which it has put on the block – sustaining capex at $4bn, which is at the lower end of previous guidance.
Xstrata’s greenfield projects have been deprioritised and cut down in terms of size and costs.
The company also said it intends to apply for secondary listing on the Johannesburg Stock Exchange, which it expects to become effective during the fourth quarter of 2013.
Shares closed 2.3 per cent higher at 328.75p.