Glencore to outline strategy and spending plans

Glencore Xstrata will extend cost-cutting targets and reveal revised plans for spending when the management team of the Switzerland-based commodities group arrives in London this week to sell the benefits of the largest takeover completed in the mining sector.

Glencore is facing pressure to detail the merits of its $46bn acquisition of Xstrata after taking a $7.7bn impairment charge on the miner's assets last month. The writedown contributed to a half-year loss of almost $9bn.

In the first detailed presentation for shareholders since the deal was completed in May, analysts expect chief executive Ivan Glasenberg to tell investors that cost savings for the deal will be at least twice the $500m previously estimated.

Mr Glasenberg and senior executives will also use Tuesday's investor day to outline the strategy and plans for spending and asset sales at the UK-listed company.

Analysts believe Glencore could mothball several projects, including the $5bn-plus Wandoan coal project in Australia. Mr Glasenberg has admonished industry rivals for overspending on building and expanding mines, which he says has swamped the world with raw materials that have eroded prices and profits.

Investors have also been pressing mining groups to return more capital rather than plough it into further growth amid signs of cooling growth in China, the world's largest commodities consumer.

Glencore is one of the world's most diversified mining groups, spanning base metals, energy and agricultural commodities.

Alongside last month's interim results, Mr Glasenberg said the integration of Xstrata had been "a lot quick and faster than we had envisaged" and annual synergies would be "materially in excess of the $500m promised at the time of the acquisition". That target was made up of $450m of marketing synergies and $50m of cost savings.

Mr Glasenberg is also likely to face questioning from investors about the sale of Las Bambas, a greenfield copper project in Peru which the company was told to put up for sale by Chinese regulators as a condition of securing approval for the deal with Xstrata.

A number of suitors, including several Chinese mining companies, have registered interest in the project, which Mr Glasenberg has said could be sold by the end of the year. RBC expects Glencore to receive $3bn for Las Bambas and for a chunk of the proceeds to be returned to shareholders.

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