Glencore Xstrata cuts coking coal cash costs by 28%
Commodities major Glencore Xstrata has cut its coking coal cash costs by 28% in the past year, the company’s industrial coal head Peter Freyberg told investors on Tuesday September 10.
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“We have scaled back our coking coal business,” Freyberg said, noting widespread cost-cutting measures at the company’s less profitable mines.
Glencore Xstrata said in June that it planned to cut production at its Newlands and Oaky Creek coking coal mines in Australia, reducing headcount by 450 across both mines by the end of the year
And an early-stage project to recover tailings from Oaky Creek has been put on hold as part of the company’s $576 million cost savings programme for 2014.
Glencore Xstrata saw Australian coking coal production increase by 21% in the first half of 2013, to 4 million tonnes, compared with 3.3 million tonnes produced in the first half of 2012, according to its first-half 2013 results published in August.
International coking coal prices have suffered from oversupply since the beginning of the year, with seaborne premium, low-volatility, hard-coking coal values dropping below $140 per tonne cfr China in June, from levels of more than $185 per tonne in February.
Coking coal only accounts for a small proportion of Glencore Xstrata’s coal business, which comprises 33 mines across Australia, South Africa and Colombia and offices in 19 countries.
The company said that, in 2014, it would realise $2 billion in savings through synergies from its Xstrata takeover, which was completed earlier this year.
Glencore has come under pressure to justify its position after posting a $7.5 billion writedown in its first half results last month.