When the biggest names in mining arrive in London this week, the surroundings will be familiar, the mood unrecognizable. A year ago as prices slumped, talk at the annual London Metal Exchange gathering was of bloodletting and journeys through hell.
On Tuesday, the 1,900 dinner guests under the huge tulip-shaped chandeliers of the Great Room in Park Lane’s Grosvenor House Hotel, will be relieved to have survived the industry’s biggest crisis in decades.
“This time last year, I was talking about a commodity-specific financial crisis,” said Colin Hamilton, head of commodities research at Macquarie Group Ltd. “The rally in commodity prices has taken that off the table. The foot is really off the throat.”
The industry hit a nadir in January as some of the largest producers creaked under the weight of their borrowings as commodity prices sank to an almost seven-year low. The slowest economic growth in decades in China, the biggest buyer of raw materials, rocked shares and cast doubt on the credibility of the more than $140 billion of debt piled up by the 10 largest miners.
Advice from Freeport-McMoRan Inc. Chief Executive Officer Richard Adkerson, addressing a shell-shocked LME Week last year, borrowed a mournful country music refrain. “If you’re going through hell, keep on moving,” he said. Codelco Chairman Oscar Landerretche told of a need to “clean the bad blood.” By now, the purge is well underway.
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