Miners juggle debts rather than sell assets cheap – by Marcus Leroux (The Australian – July 21, 2016)


The Times – Three years ago, Ivan Glasenberg issued a characteristically blunt assessment of where the mining industry had gone wrong. “The big guys really screwed up,” the Glencore boss told an industry conference. “We’ve always been wanting to keep building and keep putting the cash which we generate into new assets.”

In the months that followed Glasenberg’s speech, news emerged of billions of dollars of private capital being pooled to take advantage of the impending shake-out. The consensus view was that the global resources industry had, in chasing an outsized Chinese boom, merely laid the groundwork for a China-inspired bust.

The private equity vultures were gathering to swoop on any gems discarded by debt-saddled companies battling to survive the downturn.

The first part of the prognosis was truer than anyone expected: commodities did not stop falling until earlier this year and even that may represent a lull in the rollercoaster. But the second part, that fortunes would be found amid the rubble of the Chinese supercycle, has proven woefully wide of the mark.

Deal volumes in the mining industry fell for the five years to the end of 2015 and the aggregate value has fallen three years in a row if you exclude BHP’s South32 spin-off.

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