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Ivan Glasenberg is calling on the new generation of mining CEOs to learn from their predecessors and stop building so many new mines just because they can.
“The big guys really screwed up,” Mr. Glasenberg, the CEO of Glencore International PLC, said on Monday in a presentation at a BMO Capital Markets conference in Florida.
“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.”
Mr. Glasenberg is one of the few CEOs of a major mining company that was not fired or otherwise replaced in the past year. Other seniors like Rio Tinto Ltd., BHP Billiton Ltd., Anglo American PLC and Barrick Gold Corp. announced changes at the top. In most cases, the shake-ups were due to poor stock performance that was a result of disappointing profits, overpriced acquisitions or both.
A common complaint about some of the senior miners is that they championed the so-called “build at any cost” strategy, in which they continued to greenlight new projects despite relatively flat commodity prices and uncertain demand. As a result, labour became increasingly scarce and capital costs soared across the industry.
In Mr. Glasenberg’s view, the resulting increase in production has also taken a toll on metal prices. Major commodities including coking coal, aluminum, nickel and zinc are arguably in oversupply right now (though others such as copper and gold are not).
He hopes that the new CEOs will see where their predecessors went wrong and will focus on maximizing earnings instead of production.
For the rest of this article, please go to the National Post website: http://business.financialpost.com/2013/02/25/the-big-guys-really-screwed-up-glencore-executive-berates-ceos-for-glut-of-new-mines/