Glencore International Plc (GLEN)’s billionaire Chief Executive Officer Ivan Glasenberg criticized his recently departed mining CEO peers for swamping the industry with mines and new production that’s crimped profits.
“The big guys really screwed up,” Glasenberg, 56, who runs the world’s largest publicly traded commodities supplier, told investors yesterday in a presentation.
“We’ve 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 Ltd. (BHP) and Rio Tinto Group (RIO), the world’s two largest mining companies, and Anglo American Plc (AAL) 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 criticized 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 told the BMO Capital Markets conference in Hollywood, Florida. “They built, they didn’t get the returns for their shareholders. It’s time to stop building.”
Glasenberg, a 28-year veteran of Glencore and the company’s largest shareholder with a 16 percent stake, took over as CEO of the Baar, Switzerland-based company in 2002 and pursued a strategy of growth by acquisition.
Since a $10 billion initial public offering in 2011, he has agreed to a $34 billion all-share deal to buy Xstrata Plc (XTA) to add mines and smelters, and completed a C$6.1 billion ($5.9 billion) takeover of Viterra Inc. in December to boost agriculture operations.
Rio Tinto’s new CEO Sam Walsh said at the same conference yesterday that he will be “taking steps to rein in capital expenditure.” Walsh replaced Tom Albanese as CEO on Jan. 17 after his predecessor quit following a $14 billion writedown on the value of takeovers.
Last year’s spending of $17.4 billion on projects by Rio will represent its peak year of investment, he said. The company estimates spending of about $13 billion this year though this may be reviewed, he said.
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