Glencore confident of massive savings
Glencore, now the world’s fourth-largest diversified mining company, began trading in London a day after the group tied up the biggest acquisition in the sector to date. Shares rose four percent to value the group at almost $71bn.
It unveiled a Glencore-heavy management team, keeping most of its divisional heads in place. The group ended the 15-month takeover process with promises that by cutting staff it could slash costs and offset falling commodity prices.
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Hide Ad“If we can cut costs enough, get rid of these corporate head offices, we can cut a lot of fat out of the system. These synergies and overhead reductions – that figure can ensure this merger is a success,” Ivan Glasenberg said in an interview.
Glasenberg said additional savings would be “substantial” as Xstrata itself had estimated it could cut $300m of administration costs, on top of trading savings.
In slides to accompany a presentation to investors Glencore said its previously announced $500m of synergies in the first full year would be “comfortably met” – fuelling expectations of a substantial improvement. Analysts expect a final figure of at least double the original amount.
But Glencore and its management team face biggest challenges in a difficult trading cycle.