Wednesday 31 October 2018 9:54 am

Glencore increases cost savings forecast on stronger coal prices


Mining giant Glencore expects to achieve 50 per cent more cost savings after being boosted by strong coal prices.

As part of a two-year cost-cutting drive the Anglo-Swiss firm had expected to save around $300m (£235m) by the end of the year but could now make savings of more than $450m, it said on Wednesday.

Its mine unit costs are expected to fall to $49 per tonne in 2019 for its operations in Australia, South Africa and Columbia, from a forecast of $52 per tonne for 2018,

“(The firm has achieved) strong unit cost performance despite material cost headwinds from energy, royalties and higher consumable costs,” the company said in a presentation to analysts in Melbourne.

The company said it expected to produce 145m tonnes of coal in 2019, which could generate $6.2bn in EBITDA earnings at a price of $108 per tonne of Newcastle coal.

Earlier this year the FTSE 100 company acquired the Hail Creek mine in Australia and a 49 per cent stake in the Hunter Valley Operations from Rio Tinto.

The joint venture with Yancoal Australia has already cut almost a fifth of its workforce and removed 13 per cent of trucks without affecting production, Glencore said.