Ivan Glasenberg takes swipe at Rio Tinto, says Glencore won’t flood coal market
GLENCORE boss Ivan Glasenberg says he won’t “cannibalise” the miner’s coal production by flooding the market with extra supplies.
GLENCORE boss Ivan Glasenberg says he won’t “cannibalise” the miner’s coal production by flooding the market with extra supplies.
While taking a swipe at takeover target Rio Tinto’s iron ore push, Mr Glasenberg backed the company’s drive to pull coal tonnes out of an oversupplied market.
He has consistently been critical of the move by the big iron ore producers, Rio Tinto (RIO) and BHP Billiton(BHP), to push more iron ore into the market, driving down the price of the steelmaking commodity.
“As we have always said as a company, we do not want to cannibalise our own production and we are not going to put our tonnes where we believe it is going to have a negative effect on pricing if demand is not there for those extra tonnes,” he said last night, as he reported a dip in Glencore’s net profit.
“We will cut back because we don’t want to be the ones forcing the price down with oversupply.”
In a remark likely aimed at Rio and BHP, Mr Glasenberg said people could question if others would fill the hole left by the tonnes Glencore had removed from the market.
Rio and BHP have repeatedly argued that as the lowest cost producers, it is their job to increase iron ore supplies in the market, because if they don’t someone else will.
“We have taken the decision that we can cut back the 15 million tonnes because we don’t believe that hole is going to be filled by others,” Mr Glasenberg said.
“That is our knowledge of the market because of our third party trading. We can say we can do it because others won’t do it.”
Glencore responded to the downturn in the coal market by shutting production at its Australian mines in the Christmas break.
It also announced last week it planned to curb Australian production by about 15 per cent, cutting more than $US1 billion worth of coal output and around 120 jobs. It has also previously announced plans to reduce coal output in South Africa by at least five million tonnes a year.
Glencore’s coal boss Peter Freyberg said the company would not be rushing to reintroduce those tonnes back into the market.
He said the cuts would come from all over and not one specific operation.
Mr Glasenberg added that the December shutdown had a positive impact on the price of coal and the company would continue to make those decisions if it believed it was oversupplying the market.
The Glencore boss wouldn’t be drawn on his failed attempt to merge with Rio Tinto, with analysts at the briefing being told not to ask questions about the rejected move, as the company would not answer them.