http://www.theaustralian.com.au/business
DIVERSIFIED miners Rio Tinto and Glencore could target $500 million in annual savings if they merge their NSW coal operations, analysts on a site tour of the Swiss giant’s assets have flagged.
Glencore, rumoured to be eyeing acquisitions, highlighted the significant synergy potential with Rio Tinto in the Hunter Valley region given the two miners had many adjacent assets.
“These have not been quantified but could total close to $500m per annum pretax, and relate to overhead reduction, mining efficiencies, logistics and blending,” Credit Suisse analyst Liam Fitzpatrick said. “Despite this, there appears to have been very limited progress between the two companies.”
Recent media reports have suggested Glencore chief Ivan Glasenberg has Rio on his acquisition wish list, but neither company has weighed in on market speculation.
Glencore kicked off a sell-side analysts tour of its Australian ¬assets this week with a visit to its coal operations, and the head of coal assets, Peter Freyberg, told those on the trip the company had a “synergistic and targeted acquisition strategy”.
The dire state of the coal market, both for thermal and metallurgical, has led to mine closures and significant job cuts. BHP Billiton last week announced 700 job cuts from its Queensland ¬operations while Japan’s Sumitomo and Brazil’s Vale have flagged closing their Isaac Plains mine, which could lead to 160 job losses.
Glencore outlined to analysts on the tour that weak metallurgical coal margins would lead to further closures in the industry.
In an investor briefing, the company’s head of coal marketing, Tor Peterson, said supply growth of the steelmaking commodity had been constrained because of weak demand growth and lower prices.
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