Glencore will cut spending, shelve dozens of projects and squeeze more than expected from its record-breaking purchase of mining group Xstrata, lifting benefits from the deal to at least $2 billion in 2014.

Commodities trader Glencore has been at pains to defend its $46 billion takeover of Xstrata, a blockbuster for the mining sector that came just as the commodities cycle turned.

The increase in the deal’s headline benefits was expected given Glencore’s conservative targets. However, the company’s promise of more to come, plus a commitment to capital discipline, was taken positively by the market.

Glencore’s shares, which have underperformed the UK mining sector by around 7 per cent since the merger completed in May, were at one stage up 2.4 per cent in London at 329 pence.

The commodities trader had forecast $500 million of synergies when the acquisition was first announced last year, but that included only the benefit of channelling more of Xstrata’s output through Glencore’s marketing machine.

In its first detailed presentation since closing the deal, Glencore said it now planned for synergies to exceed $2 billion for 2014, including marketing and financing benefits but also $1.4 billion through cost savings alone, more than many analysts had forecast.

“As we delve deeper into the assets...I am sure there is more to go – to pinpoint what that number is, is difficult,” chief executive Ivan Glasenberg said yesterday, adding that the additional cuts would come from both trading and operations.

Glencore did not say how much it expected to squeeze from the next phase of cost saving and synergies, to be outlined in the next six months, though analysts at Sanford Bernstein said it could be as high as another $1 billion.

Glencore has closed 33 offices in three months and it has slashed almost half Xstrata staff in headquarters or divisional offices. – (Reuters)