Glencore CEO Ivan Glasenberg has questioned the tactics of BHP increasing iron ore production, claiming it will impact poor African nations.
Hot on the heels of the announcement by BHP that it would increase its iron ore output and lower costs, Glasenberg said the move will hurt greenfield projects in Africa.
“If you look at the statement put out today by BHP Billiton, one of the world’s biggest iron-ore producers, saying they’re going to expand production — it has already had an impact on prices — that is going to hurt Africa,” he said.
Citing Guinea’s massive Simandou iron-ore project, Glasenberg said it was less likely to get up if the market was oversupplied, The Australian reported.
“Is Guinea going to have Simandou developed at current prices? It’s going to be difficult,” Glasenberg said.
“It’s a project that is going to cost in excess of $US25 billion. Who’s going to put in$US25 billion?”
Glasenberg has not been shy in giving industry heavyweights a lesson in supply and demand.
Last year he said companies had saturated the industry with new mines which he blamed for a surplus in metals and shrinking profits as prices soften.
However the comments about Simandou come after speculation that Glencore was interested in bidding for block 1 and 2 of the deposit.
Glencore reportedly told the government it holds a “high level of interest” for the development rights of Simandou North when a contingency of Glencore representatives travelled to the Guinea capital of Conakry in early June and met with senior government officials.
However with a falling iron ore price and an increasing level of low-cost supply set to come from the likes of BHP and Rio Tinto alike, any new mines not already committed seem highly unlikely.