Hollywood, United States — 27 February 2013 – Glencore International plc’s billionaire CEO Ivan Glasenberg has criticised his recently departed mining CEO peers for swamping the industry with mines and new production that have crimped profits.
“The big guys really screwed up,” Glasenberg, 56, who runs the world’s largest publicly traded commodities supplier, told the BMO Capital Markets conference here, reports Bloomberg News.
“We have always been wanting to keep building and keep putting the cash which we generate into new assets,” he said. “That’s what we’ve got to stop doing as a mining industry. We’ve got to learn about demand and supply.”
BHP Billiton Limited and Rio Tinto Group, the world’s two largest mining companies, as well as Anglo American plc, have reported lower profits this month on rising costs and waning global growth. The CEOs of those three have quit or announced plans to depart after investors criticised them for the acquisition of assets whose value was later written down.
“Now we have a new generation of CEOs; I hope CEOs have learnt their lesson,” Glasenberg said. “They built, they didn’t get the returns for their shareholders. It’s time to stop building.”
Glasenberg, Glencore’s largest shareholder with a 16% stake, took over as CEO of the Baar, Switzerland-based company in 2002 and pursued a strategy of growth by acquisition.
Rio Tinto’s new CEO Sam Walsh said at the same conference that he would be “taking steps to rein in capital expenditure.” Walsh replaced Tom Albanese as CEO last month after his predecessor quit following a US$14 billion write-down on the value of takeovers.
“I’ll be looking at existing projects with a fresh pair of eyes and considering all alternatives,” Walsh said. “These could include continuing with the current plan, slowing it down, introducing new partners or cancelling projects altogether. This review has high priority.”
BHP’s newly appointed CEO Andrew Mackenzie plans to make cutting costs and boosting productivity a priority, he said in an interview with the Australian Broadcasting Corporatin last week.
Anglo American’s Cynthia Carroll departs in April, and is being replaced by Mark Cutifani “’ currently head of AngloGold Ashanti Limited, Africa’s largest producer of the precious metal.
“There’s no doubt in the world that shareholders are demanding discipline in terms of the way we allocate capital now,” Cutifani said in Cape Town earlier this month. “As an industry, we’ve lost a bit of trust and as leadership we’ve got to regain that trust.”
Source: Bloomberg News. For more information, click here.