Glencore chief slams mining overload
"The big guys really screwed up," Mr Glasenberg, 56, told investors. "We've always been wanting to keep building and keep putting the cash which we generate into new assets. That's what we've got to stop doing as a mining industry. We've got to learn about demand and supply."
The world's biggest mining companies including BHP Billiton, Rio Tinto and Anglo American reported lower profits this month on rising costs and waning global growth.
The chief executives of all three companies have quit or announced plans to go after investors criticised them for takeovers that were later written down.
"CEOs of all the mining companies have lost their jobs," Mr Glasenberg told the BMO Capital Markets conference in Florida. "Now we have a new generation of CEOs. I hope CEOs have learnt their lesson. They built, they didn't get the returns for their shareholders. It's time to stop building."
Mr Glasenberg, a 28-year veteran of Glencore, took over as chief executive in 2002 and pursued a strategy of growth by acquisition. Since a $US10 billion initial public offering in 2011, he has agreed a $US34 billion all-share deal to buy Xstrata to add mines and smelters, and completed the $US5.9 billion takeover of Viterra in December to boost its agriculture operations.
Stalling development of new mines would help prolong higher prices for commodities, he said. Mr Glasenberg is Glencore's biggest holder with about 15.5 per cent of the company.
"We will get better returns on our investments, we will be able to kick out more cash to our shareholders," he said. "We will be late to invest. So, who cares? We'll be late and we'll have to invest in five years' time. It'll take us three years to build the mine but we could hopefully have an eight-year run."
Glencore shares rose 2.2 per cent to close at 381.95 pence in London, valuing it at £27.1 billion.
Combining with Xstrata, the company will have interests in about 35 coal mines in Colombia, Africa and Australia, and make up about 10 per cent of global seaborne coal exports.
It will be the world's third-biggest producer of copper, the largest zinc miner, and the biggest exporter of coal burned by power stations. The group will have about 11 per cent of the 13 million tonne global zinc market and about 40 per cent of the 1.9 million tonnes of the metal produced in Europe.
Glencore hopes to get final regulatory approval for the Xstrata takeover from China by a March 15 deadline, Mr Glasenberg said, adding that he did not think Xstrata's 25 per cent stake in Lonmin Plc is a "long-term asset" for the next company.
"I hope we are in a new paradigm in the mining industry," Mr Glasenberg said.
Frequently Asked Questions about this Article…
Glasenberg criticised rival miners for swamping the market with new mines, which created a metals surplus and trimmed industry profits. He argued the sector must stop automatically reinvesting cash into new assets and instead learn from demand and supply dynamics.
The article says major miners including BHP Billiton, Rio Tinto and Anglo American reported lower profits amid rising costs and weaker global growth. Investor backlash over expensive takeovers that were later written down has contributed to CEOs quitting or announcing departures.
Glencore pursued growth by acquisition under Glasenberg. Since a US$10 billion IPO in 2011 it agreed a US$34 billion all‑share deal to buy Xstrata and completed a US$5.9 billion takeover of Viterra to boost agricultural operations.
Glasenberg said delaying new mine development would help prolong higher commodity prices, which could improve returns on investments and allow companies to generate more cash for shareholders. He also noted that if firms invest later, a mine might take three years to build and could enjoy an extended period of higher prices.
Post‑combination, Glencore will hold interests in about 35 coal mines across Colombia, Africa and Australia and represent roughly 10% of global seaborne coal exports. The group would be the world’s third‑biggest copper producer, the largest zinc miner, and a leading coal exporter, with about 11% of the 13 million tonne global zinc market and roughly 40% of European zinc production.
Yes. The article reports Glencore shares rose 2.2% to close at 381.95 pence in London, valuing the company at about £27.1 billion.
Glasenberg said Glencore hoped to get final regulatory approval for the Xstrata takeover from China by a March 15 deadline, according to the article.
The article states Glasenberg is Glencore's biggest holder with about 15.5% of the company. For everyday investors, a large founder or CEO stake can signal aligned interests because the CEO stands to gain or lose alongside other shareholders.
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