Glencore Xstrata studies deals with Rio Tinto and BHP Billiton in Australia

Glencore Xstrata, the world's fourth-biggest mining company, is studying separate deals with Rio Tinto and BHP Billiton in Australia to reap cost savings at struggling coal and nickel operations.

The company is assessing a bid for BHP's Nickel West assets in Western Australia, which are near a Glencore nickel project, chief executive Ivan Glasenberg said. The sale also has attracted rival Mick Davis, former chief executive of Xstrata, whose X2 Resources has studied bidding, said a source.

Global mining companies are looking to make cost savings after a decade-long boom in metals prices waned amid increased supply and slower Chinese economic growth.

Glencore rose for the first time in nine days in London trading yesterday, advancing 1.7 per cent to close at 331.85p. Rio gained 0.9 per cent to 3,381.5p and BHP climbed 1.2 per cent to 1,927p in the city.

Glencore reported 2013 pro-forma adjusted net income of $4.58 billion, described by Citigroup as an “exceptionally strong” result, exceeding its $4.01 billion estimate, even as year-earlier earnings were 23 per cent higher.

The group has raised its estimate of the savings it expects following last year’s Xstrata acquisition, as it focuses on cost-cutting and targets higher returns for shareholders.

The group, which completed the record-breaking acquisition of Xstrata in May, was also victim of souring sentiment in the mining sector and in August announced a $7.5 billion impairment on the assets it inherited from the miner. But the company, whose interests range from a 44 per cent stake in the Collahuasi mine in Chile, one of the world’s largest copper mines, to a trading hub in its hometown of Baar, Switzerland, has identified cost savings from the acquisition of more than $2.4 billion. That compares with guidance of $2 billion given late last year.

The full benefit of savings will be realised this year, said the firm. – (Reuters/Bloomberg)