A generation of new bosses taking the helm at the world’s biggest mining companies is unanimous in preaching austerity: no major project approvals, no blockbuster deals, no risks.
The result, analysts say, could be a medium-term supply squeeze and subsequent price spike in some unloved base metals like zinc from 2016, as key investment decisions are put off and projects turned down or sold off. Good news for miners if the squeeze lifts prices - even on lower volumes.
But, more importantly, the tough talk - amid unprecedented pressure from institutional investors - marks a major shift for the mining sector’s behemoths, whose decision-making, they say, is focused on margins and returns after years of chasing ever increasing production.
“The big guys really screwed up,” Glencore chief executive Ivan Glasenberg told a conference this week, in a typically direct criticism from the sector’s self-proclaimed iconoclast. The “big guys”, he said, failed to control supply growth, pouring money into projects and deals as soon as the market turned.
Indeed, capital expenditure in the sector soared 136 per cent between 2009 and last year, when miners aggressively embraced growth as the Chinese economy responded to stimulus measures.
“When the markets do get stronger, no need to keep building a new asset and let’s keep the market tight for a while,” Glasenberg told analysts and investors in Florida.