CAPE TOWN. – Anglo American’s chief executive said yesterday the mining industry had itself to blame for oversupply in the market and cannot rely on a reversal of the commodities price slump anytime soon.
Mr Mark Cutifani told a mining conference that for some producers, adjusting supply to align with decreasing demand growth may not make sense as they seek to maintain market share and drive competitors out of business.
“This strategy generally has a net negative effect,” Mr Cutifani said.
“Moreover, we can’t rely on a reversal of this price slump any time soon. 2016 is already shaping up to be the most challenging yet.
“Opinions are divided on whether we have reached the bottom of the cycle . . . So things may still get worse before they get better.
Anglo announced plans in December to whittle down its business to cope with severe falls in commodity prices. The plan involves offloading three-fifths of its assets.
“We will be making the appropriate commercial decisions to exit a number of our mines in several countries around the world – but let’s not see that as a negative step,” Mr Cutifani told the gathering.
“For the assets that we choose to exit, it is about giving many of them and their employees a more sustainable future under new ownership that is better suited to focus attention and capital on those assets.”
Anglo American is expected to give more details about its future portfolio alongside its annual results next week.
Meanwhile global mining firm Rio Tinto is looking for opportunities to expand in Africa as it bets on long term demand growth for minerals, a senior executive said yesterday.
A sharp fall in commodity prices is
forcing most mining firms to hold back on expansion, but Rio Tinto is seen a potential favourite for investors as it is a low
cost producer, with a stronger balance sheet.
“The global drivers for long term demand for African minerals all point in the right direction,” Rio Tinto chief executive for Diamonds and Minerals Alan Davies told a mining conference in Cape Town.
“Rio Tinto continues to invest and explore for opportunities in Africa, in particular in Botswana and Namibia.”
He did not provide further details, but both Botswana and Namibia are among the major diamond producers in Africa.
Rio Tinto currently has 5 000 employees and contractors across its African operations, Mr Davies said.
Prices of most commodities have in recent months fallen to multi-years, hit by oversupply and slowing growth in major consumer China. – Reuters.