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.

“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.