At an industry conference held in Cape town, business moguls in the mining sector have been cautioned on the possible crisis that may befall them in the coming months.
Among those at the meeting were the chief executive officers of Anglo American and Vedanta Resources. there, companies were to adopt necessary measure that will help them adapt and to survive the up-coming crisis.
In his speech on Monday, Anglo CEO Mark Cutifani said:
“We can’t rely on a reversal of this price slump any time soon. For many of us in the industry, 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,…Things may still get worse before they get better,”
Last year saw a dramatic crisis for the mining industries as industrial metals fell by 27 percent as supplies exceeded demands from its world biggest consumer – China. This is in fact the worst they have ever had since 2008. Fighting with slumping profits, producers were forced to scrap dividends, raise cash and cut debt to stay afloat.
On the other hand, the Vedanta CEO Tom Albanese said he hesitated calling the bottom line but the company is more focused on meeting its debt requirements than any other thing.
“Our peers in the sector are doing exactly the same thing,” Albanese said in an interview with Bloomberg Television on Monday. “The businesses are just hunkering down and getting that done. And those businesses that are best at it will be best-recovering,” he said.
In addition to this, the CEO of South32, Graham Kerr said market condition might stay volatile due to the excess supply of most commodities.
“Excess supply is awash in most commodities and as painful as it is, economically and rationally it needs to leave the market to create a long-term sustainable future,” Kerr told the conference. “I expect this challenging environment to persist for some time and market conditions are likely to remain volatile.”
However, other methods of resolving the grand effect of the decline in metal prices have been adopted by most of the industries. Companies like Freeport-McMoRan and Glencore have ran to their shareholders for money, while Anglo joined Glencore and resorted to scrapping its dividend.“No mining company is untouched and each has its own distinct issues to address,” Cutifani said
“The tremendous changes taking place in the world, and particularly the depth and length of this commodity downturn, are forcing mining companies to look at themselves in a different light, and to respond accordingly,” Cutifani concluded.