Glencore CEO Lists Mining’s Mistakes After $1 Trillion Spree – by Agnieszka De Sousa (Bloomberg News – May 11, 2016)

http://www.bloomberg.com/

Glencore Plc’s billionaire Chief Executive Officer Ivan Glasenberg wants the mining industry to learn from past mistakes after a $1 trillion spending spree left the world awash with metals.

Growth for the metals industry should mean cash flows and earnings, not digging up as many tons as possible, Glasenberg said in a presentation on Tuesday. Profit can be improved by accepting lessons from the 12 years when mining companies poured cash into boosting production of everything from copper to iron ore.

“Accept that volume growth cannot be an end in itself,” according to Glencore’s slides from the Bank of America Merrill Lynch mining conference in Miami. Under a headline of “Recipe for Better Returns,” the company wrote that management incentives in the industry need to encourage “rational behavior.”

Years of debt-fueled investment in mining resulted in a massive oversupply of commodities at the same time that China’s economy hit the brakes.

The rout in prices that followed forced mining companies to slash debt, cut costs and sell assets. In just five years, the FTSE 350 Mining Index saw more than 70 percent of its value disappear.

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