GlencoreXstrata chief Ivan Glasenberg has blamed mine expansions for the drop in iron ore prices, not for the first time schooling the majors in supply and demand.
Speaking at the company’s annual general meeting in Switzerland, Glasenberg said the company was sheltered from the current iron ore glut with its diversified asset portfolio.
“We are not heavily exposed to iron ore except on the trading side and therefore we believe we have an opportunity against our peers there,” Glasenberg said.
“We are not big players in the iron-ore market.”
Iron ore prices have dropped to their lowest levels in two years, with the spot price trading at $97.50 a tonne.
This represents a 27 per cent decrease since the start of the year, with some analysts predicting concerns of oversupply and Chinese demand will see the price drop further to $80 a tonne.
Glasenberg laid the blame for the price fall squarely on the shoulders of major miners who have undertaken expansion projects.
“Prices are coming off because we see massive expansions coming there from our major competitors,” Glasenberg said.
“They continue to expand these brownfields and put more supply into the market.”
The dig comes as Rio Tinto, BHP Billiton, and Fortescue Metals Group all add to their Pilbara iron ore production levels through multi-billion dollar brownfield expansions.
Stockpiles of ore at Chinese ports are at record levels after an aggressive restocking program and there are fears the market will not be able to absorb a new wave of supply,with iron ore mining stocks hammered over the last week.
“We believe we have assets in the right sectors which we like,” Glasenberg told shareholders.
This is not the first time Glasenberg has schooled miners on the theory of supply and demand.
“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,” he said.
Since the $US34 billion merger with Xstrata, Glasenberg has worked to slash costs and shelve projects.
He said that by the end of 2014, the total amount of savings would amount to $US2 billion,
Capital spending it set to be reduced by a further 12 per cent in 2015, and work on 44 of Xstrata’s 88 projects will be dropped.
"We have reduced a large amount of the costs since acquiring Xstrata," Glasenberg said.
“Our capex on the assets we are building now will end at the end of '14, the beginning of '15, so therefore we should have a good free flow of cash kicking into the company," Glasenberg said.
Meanwhile, shareholders have decided to drop the 'Xstrata' from the company’s name and appoint its first female director to the board by the end of the year.