Ann: Ceasing to be a substantial holder, page-11

Dont look at Glencore as a funding opportunity to support the project.



Glencore boss slams iron ore sector

• DOW JONES NEWSWIRES WITH A STAFF REPORTER
  
• 7 HOURS AGO

• INDUSTRIES
  
• RESOURCES AND ENERGY

The chief executive of mining giant Glencore, Ivan Glasenberg, again criticised the industry for its over-investment in certain commodities, telling investors that "fortunately we don't produce iron ore."

Mr Glasenberg's apparent distaste for the key steelmaking ingredient comes despite Glencore's approach earlier this year to Rio Tinto, one of the world's largest iron ore producers, over a potential tie-up. The approach was rejected and under UK company rules Glencore can't revive the talks until later next year.

Mr Glasenberg has criticised mining rivals such as Rio and BHP Billiton for continuing to invest in and ramp up iron ore production even though the commodity's price slumped this year. Speaking at the company's investor day, he said the reason prices had fallen was that "we've all invested too much, we've increased supply and unfortunately a big amount has gone in the iron ore market."


The comments came as benchmark iron ore slid to $US68.90 a tonne overnight, just over 1% above its five-year low.

Glencore said it would continue to take a disciplined approach to expanding its production capacity, amid the recent fall in commodity prices.

Mr Glasenberg said "capital misallocation, not a lack of demand, remains a key issue for the sector resulting in a clear need to differentiate by commodity."

"We will continue our disciplined approach to capital allocation, based on the supply-demand fundamentals," he added.

Glencore earlier said it would continue to focus its investment on projects that are already under way, rather than on new, so-called 'greenfield' mines.

"The amount of capital that goes into these projects, you don't get the returns," Mr Glasenberg said." Greenfield is something we are very scared [of] and you won't see us doing greenfields for a long time."

Glencore, the world's third-largest diversified miner by market capitalisation, confirmed its so-called 'sustaining' capital expenditure -- investment in current operations -- would be $US4 billion ($4.7bn) this year but would drop to nearly $US3.5bn by 2017.

The trader and producer of commodities ranging from oil-to-grains and copper, said it would aim to generate a 20-25 per cent return on equity from its mining activities and a 40-65 per cent for its trading activities.

The Baar, Switzerland-based firm, also said it would continue to return cash to shareholders, having completed 65 per cent of an already-announced $US1bn share buy back.