Big miners to blame for iron ore fall, says Glencore Xstrata chief Ivan Glasenberg – by Amanda Saunders (Sydney Morning Herald – May 21, 2014)

Glencore Xstrata chief Ivan Glasenberg has criticised iron ore miners for putting pressure on prices for the commodity through aggressive brownfields expansions.

Speaking before the latest reading of iron ore spot prices in China showed the price had fallen a further 1 per cent overnight to $US97.50, Mr Glasenberg said Glencore had an advantage over its competitors because it did not produce iron ore.

“We are not big players in iron ore market … prices are coming off because we see massive expansions coming there from our major competitors,” Mr Glasenberg told shareholders at the company’s second annual meeting, on the shores of Lake Zug, in Switzerland, on Tuesday night.

“A large amount of them have these brownfields expansions, they continue to expand … and put more supply into the market. “So we are not heavily exposed to iron ore, except on the trading side, and therefore we believe we have an opportunity against our peers there.” Mr Glasenberg has historically not been shy about pointing out shortcomings among his pure-play mining competitors.

He said Glencore was “in the right assets” – namely nickel, zinc, copper and coal – where supply growth was not exceeding demand.

Mr Glasenberg says the Swiss-based commodity producer and trader will continue to push on Xstrata mining assets for cost savings, a year after a bitter $US29 billion “merger” with the miner was finalised, and he will continue to chase greater returns for shareholders.

“We also have a commitment, which we’ve said before, that any excess capital we will kick out to shareholders,” he said.

“We are not a company that is going to grow for growth’s sake and keeps the money in the company just to build new assets.”

Tony Haywood, the former BP boss who was named Glencore Xstrata chairman this month, told the meeting that the board was considering a dividend reinvestment scheme and would make a decision “very shortly”.

Glencore’s protracted and at times bitter $US29 billion ($31.3 billion) takeover of Xstrata, finalised last year, added nickel, coal, copper and zinc mines to the company’s vast trading empire.

“This is a great company because we have real diversity, (we are) very different to the rest of our mining peers and oil companies in this industry and trading companies,” Mr Glasenberg told the meeting.
“We have it all.”

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