Glencore chief has criticised mining CEOS for saturating the industry with new mines, leading to a surplus in metals and shrinking profits.
“The big guys really screwed up,” Ivan Glasenberg told investors in a presentation, smh reported.
“We've always been wanting to keep building and keep putting the cash which we generate into new assets. That's what we've got to stop doing as a mining industry. We've got to learn about demand and supply.”
Three of the world’s biggest mining companies including BHP, Rio Tinto and Anglo American all reported lower profits on the back of rising costs and lower demand.
And with all three company CEOs announcing their departures, Glasenberg said he hoped the new generation would learn from previous mistakes.
“Now we have a new generation of CEOs. I hope CEOs have learnt their lesson. They built, they didn't get the returns for their shareholders. It's time to stop building.”
Glasenberg argues that stalling the development of new mines will help prolong higher commodity prices.
“We will get better returns on our investments, we will be able to kick out more cash to our shareholders,” he said.
“We will be late to invest. So, who cares? We'll be late and we'll have to invest in five years' time. It'll take us three years to build the mine but we could hopefully have an eight-year run.”
Combining with Xstrata on a $US34 billion all-share acquisition deal, Glencore now has interests in about 35 coal mines worldwide, and makes up about 10 per cent of global seaborne exports in fuel.
The group is set to become the world’s third biggest producer of mined copper and the largest zinc miner.
The deal means the group will attain 11 per cent of the 13 million metric-ton global zinc market and about 40 per cent of the 1.9 million tones of the metal produces in Europe.
“I hope we are in a new paradigm in the mining industry,” Glasenberg said.
“I hope that the mining engineers who previously ran these major companies are not just gung ho to build new mines because of what's happened in the past.”