Glencore chief blames rivals' overproduction for share price fall

The chief executive of Glencore on Thursday blamed the 40 per cent plus fall in its share price since the commodity company went public on overproduction by rivals.

Accusing his peers of flooding the market with raw materials and failing to understand the basics of supply and demand, Ivan Glasenberg said he was doing all he could to get Glencore's shares back to their 2011 flotation price of 530p. They were trading at 304.6p on Thursday, down 1.8 per cent.

"Unfortunately, our competitors . . . have produced more supply than demand and commodity prices are down for that reason," Mr Glasenberg told shareholders at the company's annual meeting in a casino in Zug, the low-tax city near Zurich in Switzerland.

"I'm doing my level best to convince our competitors that we should understand the words supply-demand," he said in response to a question from a private shareholder about Glencore's share price performance.

South African-born Mr Glasenberg, a champion race walker, has repeatedly criticised rivals including Rio Tinto and BHP Billiton, accusing them of swamping the world with raw materials. He remains the company's second-biggest shareholder with an 8.4 per cent stake.

Founded in 1974 by Marc Rich, the father of modern commodity trading, Glencore has become the world's third-largest mining company by market capitalisation following its $68bn purchase of Xstrata in 2013. It is now a leading producer and trader of copper, thermal coal and zinc.

The company's initial public offering in 2011 made billionaires of its senior managers, including Mr Glasenberg.

However, some institutional investors shunned the flotation, saying it had been over priced by Glencore's bankers.

Glencore shares have fallen 42 per cent since they were listed on the London Stock Exchange, underperforming the FTSE 100 by almost 50 per cent. The all-time peak of 559p was hit on the opening day of trading.

Other UK-listed miners have also struggled over the past four years. Anglo American has lagged behind the benchmark UK index by 67 per cent, and Rio by 37 per cent.

"The share price is also very important to us," Mr Glasenberg told shareholders at Thursday's meeting, noting Glencore had returned $9.3bn to investors through dividends and share buybacks since its flotation. "That's similar to the amount we raised in the IPO."

Mr Glasenberg said he was optimistic about the prospects for the company's key products.

The company has dismissed concerns that efforts to tackle climate change could eventually prevent miners and oil companies from fully developing their reserves.

Tony Hayward, Glencore's chairman and former BP chief executive, said the idea of so-called "stranded assets" was a false one.

"In our view, there is no scenario where fossil fuels will be eliminated from the energy mix in the 20 to 30 years," he added.

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