Sept 10 - The newly merged mining giant GlencoreXstrata surprised investors by upping its target for cost cutting from an initial estimate of $500 million to $2 billion. Hayley Platt reports.
$2 billion dollars is today's daily digit - the amount Glencore expects to save following its takeover of Xstrata last year. That's four times the original estimate and there could be more to come. Glencore's promised investors it will slash costs and shelve some risky projects to reach the $2 billion dollar target by next year. Kevin Allison is from Reuters BreakingViews. SOUNDBITE: Kevin Allison, Global Resources Columnist, Reuters BreakingViews, saying (English): "They're not doing as many future projects, that's savings that's going to come out of their future capex targets, several billion dollars. Then there's the savings they're getting from cutting out extraneous offices, mashing together the Xstrata and the Glencore head office and at a regional level in places like Australia, Chile, they're eliminating this kind of layer of management of offices that Xstrata have." The $46 billion dollar takeover of Xstrata created the world's fourth biggest mining company. Adding coal to Glencore's trading empire. So far the bulk of its operational savings have come from Xstrata's mines - with projects deemed 'too expensive' being shut down. But that could soon change. SOUNDBITE: Kevin Allison, Global Resources Columnist, Reuters BreakingViews, saying (English): "They haven't gotten as far in making operational savings in things like copper, nickel, led, the other kind of base metals businesses, so although they're not giving specific targets, the implication is it's larger than the market was expecting but there's even more cost savings to come." Last month the mining giant came under fire for writing more than $7 billion off the value of Xstrata's assets. It's shares were up 3 percent in early trade - after underperforming a volatile market by around 7 percent since the merger