Mining Roundup: Glencore Xstrata Raises Merger Savings Estimate

Written by: Jane Tindall
September 11, 2013 Wednesday, September 11th: Commodities trader and metals producer Glencore Xstrata (LON:GLEN) has raised its estimate of savings from its takeover of Xstrata to at least four times the initial forecast.

The Switzerland-based group had estimated $500 million of synergies when the $44 billion acquisition was first announced last year- – but that included only the benefit of channelling more of Xstrata’s output
through Glencore’s marketing machine.
In its first detailed presentation since closing the deal in May, Glencore yesterday said that it now planned for synergies to exceed $2 billion for 2014, including marketing and financing benefits but also $1.4 billion through cost savings alone, more than many analysts had forecast.

Glencore had been expected to use yesterday’s investor day to re-emphasise the merits of the Xstrata deal after taking a $7.7 billion impairment charge on the miner’s assets last month. The write-down contributed to a half-year loss of almost $9 billion.
During the meeting, Glencore also reported that three to four Chinese groups are interested in its $5 billion-plus Las Bambas copper project in Peru, which the company agreed to sell in return for Beijing’s go-ahead for its purchase of Xstrata. CEO Ivan Glasenberg noted that the Chinese suitors might be allowed to compete against each other, given strong interest ahead of a first bid deadline next week.

**Glencore’s shares yesterday rose 2.3 percent to 329p, the highest since May. Today, the stock has extended gains.**
**As of 10:00 BST buy Glencore shares at 333.85p.**
**As of 10:00 BST sell Glencore shares at 333.65p.**
***Caerus Global Calls for Dominion to Buy Back Shares***
Dominion Diamond (TSE:DDC) should make “significant” share buybacks instead of reserving cash to expand its Ekati mine, one of the Canadian diamond miner’s shareholders, Caerus Global Investors, said yesterday.

Dominion is set to start the permitting process for a new area of the Ekati mine, called Jay Pipe, this autumn, and said last week it would consider returning cash to shareholders only after further details on Jay have been settled (Mining Roundup: Canada’s Dominion Diamond Reports Q2 Loss).
**As of 10:00 BST buy Dominion Diamond shares at C$13.57.**

**As of 10:00 BST sell Dominion Diamond shares at C$13.26.**
***Russia’s Rostec and IST Group to Invest $1bn in Rare Earths Production***
!m[Dominion Diamond Investor Pushes for Share Buyback](/uploads/story/5400/thumbs/pic1_inline.jpg)
Russia has reaffirmed its resolve to become less dependent of China’s rare earths production, which accounts for more than 90 percent of the global supply of the elements used in military hardware, telecommunications and renewable energy.
Russian state corporation Rostec and IST group, an investment company of Russian tycoon Alexander Nesis, plan to invest $1 billion in rare earths production by 2018 in support of the country’s bid to lessen its dependence on China, Reuters has reported.
The joint venture project of Rostec and IST group, TriArkMining, is set to extract 40,000 tonnes of rare
earths, having won the right to a monazite concentrate currently stored by state-owned Uralmonatsit in warehouses in the Sverdlovsk region of Russia.

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