Why the top posts are changing hands
MINING is a cyclical business. If China’s epic demand for commodities has done much to disguise that fact in recent years, a slew of changes at the top of the big Western mining firms is a timely reminder that it is still true. The latest casualty, Tom Albanese, was shown the door by Rio Tinto on January 17th. His departure is the latest sign that investors reckon a change of leadership is required for the next phase of the cycle.
Rio’s decision comes after Cynthia Carroll said last October that she would step down as boss of Anglo American. A couple of weeks later it was reported that BHP Billiton, the world’s biggest mining company, is seeking a successor to Marius Kloppers, suggesting that he may remain only for another year or so. The terms of a merger between Glencore and Xstrata mean that Mick Davis, Xstrata’s boss, will also soon be looking for a new job.
The clear-out is no coincidence. With the exception of Mr Davis the current crop were all appointed in 2007. If mining bosses have a shelf-life, they may all have reached the end of it. Moreover, none has been entirely successful in profiting from sky-high commodity prices.
Each of the mining giants claims to have been the first to notice the rise of China—which now consumes 40% of the world’s industrial metals—and to have reacted fast. In fact, they were all slow off the mark. The current bosses took office with a remit to catch up. But things have not gone well. Soon after taking over, Mr Albanese won a bidding war for Alcan, paying $38 billion for a Canadian aluminium company that, it transpired, could not compete against Chinese firms with access to dirt-cheap capital. He leaves under the cloud of his firm’s latest huge write-down, of up to $11 billion, on the business.
Mrs Carroll had hoped to beef up Anglo’s iron-ore operations with a new mine in Brazil. But it has got tangled in the country’s notorious red tape and may never recoup its cost ($8 billion so far).
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