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ROME — Beheadings are putting the mining world through something akin to the French Revolution. Mining bosses who landed their jobs in the bubble era – 2006 and 2007 – or did their signature top-of-the-market deals in those years are being fired with alacrity. Or they are announcing their retirements, much to the delight of shareholders grown weary of the value destruction borne of stunningly overpriced takeovers and soaring costs.
The changing of the guard started in the autumn, when Cynthia Carroll said she would quit as chief executive officer of Anglo American. Not long after, BHP Billiton, the world’s top mining company, revealed that it would replace Marius Kloppers, the man who made a wrong bet on shale gas and botched the attempted takeover of Potash Corp. of Saskatchewan (the new CEO is Scotsman Andrew Mackenzie). Last month, it was Rio Tinto boss Tom Albanese’s turn. The biggest sinner of them all, he was knocked off for his boneheaded purchase of Montreal’s Alcan in 2007 for $37-billion (U.S.), most of which has now been written off.
Canadian mining bosses have been frog-marched to the guillotine too – Tye Burt of Kinross Gold and Aaron Regent of Barrick Gold were two of the late 2012 victims. A year earlier, Roger Agnelli was pushed out of Vale, the Brazilian company that paid an eye-watering price for Canada’s Inco.
The last man standing is Ivan Glasenberg, the Glencore International CEO who is about to become the head of the mining and trading colossus to be formed by the merger of Glencore and Xstrata, the Anglo-Swiss miner that owns Falconbridge.
When the merger is done in March, Mr. Glasenberg will run the world’s fourth-largest mining group. The trading businesses alone, which include Canadian grain handler Viterra, give Mr. Glasenberg more market intelligence than any resources boss on the planet. With Xstrata at his side, he is the man to watch. Rapid change in the mining industry will bring upheaval that can be exploited.
Mr. Glasenberg was a student of Marc Rich, the infamous “combat trader” who exploited turmoil and political instability to earn fortunes trading oil and other commodities. Mr. Rich became one of the most wanted fugitives in U.S. history in the 1990s, but was pardoned by president Bill Clinton on his last day in office in 2001.
Mr. Glasenberg, who is from South Africa, an accountant by training and a champion race-walker, was part of the management buyout of Mr. Rich’s company in 1994. The new private firm was renamed Glencore and evolved into a trading powerhouse with no equal. It also developed a mining business whose assets included a 34-per-cent stake in Xstrata, which floated on the stock market in 2002. Then valued at $500-million (U.S.), Xstrata is now worth $54-billion.
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