IT Business
Glencore and Xstrata mining IT mix in £50bn mega merger
Commodities giants could look for major tech savings
By Leo King | Computerworld UK | Published 12:47, 02 February 12
Commodity trading and mining giants Glencore and Xstrata are in advanced discussions over an $80 billion (£50 billion) merger that is expected to precipitate a vast technology programme.
While a deal would likely focus on expanding the companies' scale, technology and operational efficiency will also be vital – with analysts having highlighted that the firms could look for savings of up to $600-$700 million.
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Both companies have standardised their enterprise resource planning and core processes on SAP enterprise resource planning software.
A deal is expected to be announced early next week, following years of talks between the companies. Neither company has made public the specific details of its merger plans.
Glencore – the world's largest commodities trader and a mining giant – said at the time of its high profile stock market flotation last year that it was engaged in an IT and business overhaul, crucial to its future.
Glencore's SAP project, called the Global Accounting Programme, is aimed at improving financial and management information across the group. It is being managed centrally in the company's Swiss headquarters in Baar, and has also been rolled out to key offices in London, Singapore, Stamford and Rotterdam.
Its core IT systems also extend to key mining sites, which are becoming increasingly automated. Arch rival Rio Tinto focuses extensively on automated mining, particularly at its lead Pilbara site in Australia.
While most of its IT systems are essentially standard, off-the-shelf products, Glencore also runs some in-house developed systems for specific processes, managed from Baar.
Meanwhile, Xstrata has a more decentralised IT model, allowing local units to run their own IT but within a set of standards.
Nevertheless, the coal, nickel, copper, ferrochrome and zinc producer also uses SAP ERP as its core software, and IT is standardised around it. In 2006, it began a programme with consultancy Accenture to roll out the software globally.
Xstrata's SAP project began in its nickel mining division, and is understood to have then been expanded across the business. It is geared principally towards better process and financial data management, and better business intelligence through a single view of its data.
Xstrata also uses Oracle Hyperion enterprise planning and budgeting software.
More operational details are expected to be announced next week, when the companies launch an official merger.
