Date: Nov 1, 2018

Recent mine acquisitions have helped Glencore achieve 50% more cost savings in its coal business than it had targeted, the world’s biggest exporter of coal for power plants said on Wednesday.

Glencore had expected to achieve annual cash savings of more than $300-million in its coal business by the end of 2018 in a two-year cost-cutting drive, but on Wednesday said it now expects savings of more than $450-million by year-end.

The company now expects its mine unit costs to fall to $49 a tonne in 2019, from a forecast of $52 for 2018, from its operations in Australia, Colombia and South Africa, it said in a presentation to analysts on a tour of its Australian coal mines.

“(The firm has achieved) strong unit cost performance despite material cost headwinds from energy, royalties and higher consumable costs,” it said in slides prepared for the tour.

The cost-cutting comes as the company, whose own coal sales make up about 12% of the seaborne thermal market, is boosted by strong coal prices, driven by rising demand in Asia.

The growth in Asia comes just as investment in new coal production has slumped and as the energy content of traded coal has dropped compared with the average energy content of coal sold by Glencore, the company said.

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