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ROME — You know that something is seriously awry in the global mining industry when the two smartest men in the room – Ivan Glasenberg and Mick Davis – are crouching under rocks. Mr. Glasenberg, CEO and co-founder of Glencore , the world’s top commodities trader, is busy whittling down a mountain of debt in the wake of the company’s submarine performance on the London Stock Exchange. Mr. Davis, the former CEO of Xstrata , launched X2 Resources a couple of years ago but has yet to do a deal.
The mining market, in other words, is moribund. No one is selling, no one is buying and values are still in retreat. If either Mr. Glasenberg or Mr. Davis were convinced the bottom had been reached, you would think they would find ways to swing back into deal-making mode, for that was what they did best.
Today’s commodities markets are not about growth; they are about survival, and the body language of the industry’s biggest players suggests that won’t change any time soon.
Not too long ago, both men were joined at the hip and were regarded as the savviest, most aggressive – and most feared – operators in the market. Mr. Glasenberg, a South African-born accountant, later champion speed walker, trained at Marc Rich’s infamous commodities trading company. With some partners, he bought out Mr. Rich’s business in 1993 and renamed it Glencore.
A bit less than a decade later, Glencore shunted some coal assets into an essentially inactive company called Xstrata and recruited Mr. Davis to run it, with Glencore keeping a large minority stake in Xstrata. Mr. Davis, who is also from South Africa, had been an executive director of Billiton and left after its 2001 merger with BHP to form BHP Billiton , now the world’s top mining company.
The duo were the great white sharks of the mining and trading world. They were propelled by their “stronger for longer” belief – the motto for their conviction that Asian growth, driven by the mass migration of humanity from the country to the cities, especially in China, would drive the prices of copper, nickel, zinc, coal and other commodities higher and keep them there for a long time. For many years, they were right.
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