Glencore PLC Chief Executive Ivan Glasenberg on Monday criticized rival miner BHP Billiton PLC, saying its plans to further expand iron-ore output will hurt the development of one of Africa’s poorest countries.
Mr. Glasenberg said the huge amount of iron-ore being produced by the world’s three biggest miners Vale SA, Rio Tinto PLC and BHP Billiton, was already having a clear impact on prices, and that further expanding output, as BHP Billiton said on Monday it intends to do, would make investing in African iron-ore a less appealing prospect.
“If you look at the statement put out today by BHP Billiton, one of the world’s biggest iron-ore producers, saying they are going to expand production—it has already had an impact on prices—that is going to hurt Africa,” said Mr. Glasenberg, who was addressing a panel discussion in London.
Iron-ore prices have plunged 41% this year to below $80 a ton, their lowest level since 2009, exacerbated in large part by the world’s three top iron-ore miners ramping up production in the hope that they can profit from economies of scale.
Mr. Glasenberg said large projects, such as Guinea’s massive Simandou iron-ore project, would be less likely to see the light of day in the current price environment.
Guinea’s government hopes that the associated infrastructure required to develop Simandou—a railway and a port—will double gross domestic product and open up the nation’s remote interior. But with iron-ore prices falling fast, that could be easier said than done.
Guinea is one of Africa’s poorest countries.
“Is Guinea going to have Simandou developed at current prices? It’s going to be difficult,” said Mr. Glasenberg.
“It’s a project that is going to cost in excess of $25 billion. Who’s going to put in $25 billion?” he said.
Source: The Wall Street Journal
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