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.
“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.
