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Glencore woos market with promises of cuts, dividends

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(Globalpost/GlobalPost)

LONDON (Reuters) - Glencore Xstrata <GLEN.L> wooed investors on its debut as a combined miner and trader on Friday, with promises of dividend payments and signals of aggressive cost cuts that mean it could beat a planned synergy target of $500 million.

Glencore, now the world's fourth largest diversified mining company, began trading in London a day after the group tied up the biggest acquisition in the sector to date.

At 0830 GMT, stock was changing hands at 336.5 pence, valuing the company at 44.5 billion pounds ($69 billion).

In slides to accompany a presentation to investors on Friday, Glencore said it had identified additional "material cost-based synergies" adding "previously announced $500 million synergies will be comfortably met" - fuelling expectations of a substantial improvement on its target for the first full year.

The group also promised it would return excess capital to shareholders through dividends or share buy-backs, tapping a sensitive subject for investors who have long complained of mining companies' low dividend yields.

Glencore also confirmed its new management team would be largely sourced from its own heavyweight executives, leaving little doubt that what was billed as a merger of equals 15 months ago has ended as a takeover.

Ebullient veteran Telis Mistakidis will run its key copper division, including mining and trading, while zinc will be split between Glencore's Daniel Mate on trading and Chris Eskdale, also an old Glencore base metals hand, on mining.

Out of 14 key positions running the group's mines and trading operations, only two will be filled by former Xstrata personnel - Peter Freyberg running coal mining and Mark Eames in charge of iron ore projects. Coal trading will remain the preserve of Glencore's Tor Peterson.

Glencore said it would update the market again in the third quarter, after completing its review of assets, but already on Friday promised job cuts and a "reduction of management layers".

Combining Glencore and Xstrata has been a marathon for Glencore CEO Ivan Glasenberg, who now faces the biggest test of his career - integrating Xstrata and making a success of a mammoth takeover at a time of cooling commodity prices.

(Reporting by Clara Ferreira-Marques; Editing by Andrew Callus)

http://www.globalpost.com/dispatch/news/thomson-reuters/130507/glencore-woos-investors-with-promise-of-aggressive-cuts