Xstrata puts cuts over Glencore

Michael Bow
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MINER Xstrata is pushing on with plans to slash unit costs by $390m (£249m) this year despite the “distraction” of Glencore’s long-running attempts to merge, it said yesterday.

The mining giant, which reported a 42 per cent drop in operating profit to $2.45bn, cut unit costs in real terms by $105m in the first half of the year, as it battled a cyclical slowdown in commodity prices.

It now expects to slash about $970m from its expenses this year, cutting $390m from unit costs.

These savings are intended to offset $580m of cost increases resulting from creaking mining infrastructure.

Chief executive Mick Davis called the savings “credible”.

He said cuts were achieved despite the proposed merger with Glencore, which posed a “potential risk of distraction”.

A deal between the two is currently up in the air after a prominent Xstrata investor, Qatar Holdings, demanded better terms.

Standard Bank’s Peter Davey called yesterday’s profits, “a surprisingly strong result”.