Glencore’s CEO Glasenberg blames big miners for iron ore collapse
Mining and commodities giant Glencore Xstrata (LON:GLEN), which is about to drop the dual moniker, came out with a harsh message for the world’s top iron ore miners, accusing them of being the main cause for the recent price slump in the commodity.
Speaking at the company’s second annual general meeting at a Swiss lakeside theatre, chief Ivan Glasenberg said rivals BHP Billiton (ASX:BHP), Rio Tinto (LON:RIO) and Vale (NYSE:VALE) has put too much pressure on iron ore prices through their aggressive brownfields expansions.
“Prices are coming off because we see massive expansions coming there from our major competitors," he was quoted as saying by Bloomberg.
He added the fact that Glencore Xstrata is not a big player in iron ore market was a key advantage. “We have it all,” Glasenberg told an audience of a couple of hundred shareholders. “We are the only company that has the mining and marketing and a vast array of assets.”
Iron ore, the main ingredient in steelmaking, fell below $100 a tonne this week for the first time since 2012, partly on concerns about increased supply from mines in Australian and Brazil, but also qualms over demand from China.
The price of ore delivered into the Asian giant, the world’s leading importer, has dropped by 27% since the beginning of the year and now trades at $97.50 a tonne.
Shareholders decided Tuesday night to change the company’s name, a year after the touted $45 billion merger between Glencore and Xstrata.
The decision of scrap Xstrata, say analysts, is much more than a label alteration. According to Dow Jones’ expert Alexis Flynn, it reveals an ongoing power dynamic change following a deal initially billed as a “merger of equals,” but which since has more closely resembled a takeover.
Glasenberg, who has spent the past year reducing expenses and overheads, said the firm would continue to push on Xstrata mining assets for cost savings. In the past 12 months the Swiss company cut an additional $340 million in costs, achieving a total of $2.4 billion since last year's mega-merger.
Glasenberg expects to deliver at least $2 billion in synergies next year as a result of the deal —four times what it initially estimated— and plans to cut capital spending 12% by 2015.
Image from WikiMedia Commons.