Ivan Glasenberg Quotes
100 Ivan Glasenberg Quotes
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So we’re not getting anything from governments to help us develop these areas because they just don’t have the funding. So I think that nationalisation it just has nowhere to go in Africa, and we need massive, massive foreign investment.
Ivan Glasenberg
When we talk about resource nationalisation, I’m saying they shouldn’t nationalise, I have no problem with governments taking something out of the transaction. We are digging the resource out of their ground, out of their country – they’ve got to get their fair share of it. I’m not saying we’ve got to own it all. But we do say don’t change the rules on us, once we put our money in the country.
Ivan Glasenberg
[On his riches after listing the company] Haven’t thought about it – I’m too busy with the float, but it’s not going to change my life.
Ivan Glasenberg
[On leaving South Africa] An enormous cultural shock.
Ivan Glasenberg
[On leaving South Africa] I stopped focusing on people being different and I started treating everyone the same way.
Ivan Glasenberg
The level of debt was crucial during the crisis. Companies that had massive amounts of debt not only had their positions threatened, but they also missed the opportunity to create value via M&A in an environment of depressed valuations. Glencore had a relatively good balance sheet but not a perfect one for deal-making. So, going forward, stress testing of balance sheets should be key for companies.
Ivan Glasenberg
[In February 2012 on the future prospects for metals] Not worried about demand, but rather about supply. Demand will be fueled by China, which will continue to grow, albeit at a slower pace, while the discipline of supply and constraints will be crucial for determining prices.
Ivan Glasenberg
[On Xstrata and Glencore in February 2012] We always had a belief that these two companies should be together.
Ivan Glasenberg
[On what level of debt and what how should we have handled the crisis in February 2012.] I think the key thing that we all learnt during the crisis was the level of debt that we all had on the balance sheet. And if we looked during the crisis at all the major mining companies, although I’m not talking about Russian mining companies only, if you talk about Western mining companies, all the big mining companies, you’re talking about Rio Tinto, when you’re talking about Anglo American, or Xstrata. We went into the crisis - all these companies with a massive amount of debt. And all these companies during 2009, early 2009 had to do all these capital raisings to stabilise their balance sheets. And the unfortunate part about it is that because all these people didn’t have their balance sheets set up correctly, no-one could take advantage of the prices. This was the time that we should of as traders, and we tried to do it also again. We should have had a stable balance sheet. We at Glencore didn’t have such a bad balance sheet at the time. But all these mining companies couldn’t move, they couldn’t acquire all these companies or the assets that were available at really distressed prices. So you didn’t see much M&A activity occur during the crisis and the companies had a big opportunity that they missed. I think that’s what we learnt about the crisis. Going forward I think most of the companies have learnt to stress test their balance sheets a lot more. We all look at scenarios - what if’s, if copper goes from $8,000 and goes down to $5,000 – $6,000. Aluminium goes from 2,400 down to 1,200 dollars how does your balance sheet look? So I think that’s what we all learnt during the crisis – stress test the balance sheet.
Ivan Glasenberg
[In February 2012 on future demand in commodities] I think demand is there. Demand is going to be strong in all commodities. The reason being I don’t think anyone realises that to date China consumes 50% of the worlds commodities. Almost all the commodities from oil to aluminium from copper to zinc etc. China’s consuming 50% of the worlds commodities. If China’s GDP grows at 8-8.5% or whatever you imagine, that means the world has to produce 4% assuming that the rest of the world stays stable you’re assuming your not going to have any growth in America, Europe okay well it may not have much growth but that’s assuming even if there’s no growth in America that’s disregarding India, so you’ve got to produce 4% more commodities. You’ve got to look at each commodity separately, and see where we can increase supply. So we said earlier aluminium and nickel are the problem commodities. Why? There is a lot of supply and supply continues there. There is curtailments and shutting of plants so that should be positive for aluminium bringing forward – nickel there is new production coming into the market from Madagascar and certain areas and is putting a bit more nickel but that will soon dry up and so we’ll eat into the excess supply there. But the commodities where you look at and don’t see an excess in supply of course is something like copper. Copper today in Chile where copper productions are going down and you’ve got to go to Africa that’s where the new production is, that’s where we’ve got to produce more copper, and unfortunately Africa doesn’t have the infrastructure…The big increased production that should even occur in this country Uracan. Until Uracan is developed it’s going to take time. Infrastructure - I don’t know what the program going to cost to develop Uracan $8-10 billion dollars that has to occur to put more supply and meet demand. So copper like zinc in the year in eighteen months - two years time when the big Century mine closes down in Australia that will be another performer. So I think you’ve got to look against, across all the commodities demand is going to be strong no matter what. Where are we going to have restraints in supply? And each one will have a different timeframe.
Ivan Glasenberg
Each country has it’s own problems. Different tax regime, royalty regime, different infrastructure problems so you’ve got to look at each country differently. Australia may have great infrastructure, good tax regime but they’ve as we saw last year they changed the tax. The mineral resource tax was increased, they changed the taxation on existing operations. So that took everyone by surprise. If you go to Africa they’ve got a tax in certain countries, they change the tax occasionally on you but not as big because they need you to invest in the country. They need the development which we bring, the capital we bring to the countries. But then again they’ve got infrastructure problems. So each countries got it’s own problems. If I look to Russia, Russia is, it’s been good, we Glencore have invested in Russia in both the oil sector, in the Aluminium sector. We’ve been in Russia for a long time as a trader. It’s a key supplier of commodities for the world so we’ve got to be here. Russia more on the Companies Act. The Companies Act of Russia is different to other parts of the world. There are different structures in the Companies Act which you’ve go to get to understand. Western companies don’t quite understand or get to grips that certain things are different where a company can own shares in itself and management can convert those shares is something new to us in the western world. So yeah, it’s got it’s problems, it does have infrastructure problems – it’s clear there’s a shortage of rail trucks, there’s a shortage in the rail system. That has to be upgraded, and I’m sure will be over time. And as Russia sorts out the infrastructure, the ports more growth in ports in order to export more commodities you will see world people developing and investing more capital into mines. And I hope in the future if some of these issues are resolved, you will see major mining companies come into Russia. And hopefully Russia will welcome major mining companies coming into and I think it’s important that they do do that because you can’t not have these massive developments of the great resources that Russia have without foreign investment. In mines which we invest in today it’s ten billion dollars, fifteen billion dollars. Now either governments can do it, but the governments don’t wish to own all the mining operations in a country. So I think they’ve got to make it inviting for foreign investors to come put ten – fifteen billion dollars into new operations and leave it to the government to develop the infrastructure – the rail, trucks, ports etc so we can do it so I think that is the future for Russia.
Ivan Glasenberg
[On the future of commodity trading companies] Commodity trading companies have been generally private companies. And in the early days when you’re a pure trading company the profits that you generated were generated in cash and working capital and if you had a partnership you could pay out partners when they left and therefore you had the cash and the working capital to do it. What has happened over time to really play in the commodity space and to be a real player you had to buy assets. And as you know with Glencore and a lot of other trading companies you bought assets. Now whether you have a lot of partners in the company or you may be a family owned company where you don’t have many partners taking equity and you’re not taking capital out of the company, if you’re not taking capital out of the company when partners leave, it’s easier. You maybe don’t have to go public just yet. But a lot of the trading companies today do have partnerships whether you do talk vitel, you talk drayford. You talk some of the companies around today, the trading companies, they do have partnerships. And if they keep buying assets, it’s eventually when partners leave you’re going to run out of cash and you’ve going to have to sell assets and no-one wants to be in that position. So that is what I call a time bomb, where if you want to grow in the fixed asset space and you want assets which is clear I think if you want to be big in this commodities space you need to buy assets. And if you need to buy assets you’ve got to have permanent capital you cannot have capital that is floating capital so I believe any of the commodity trading companies who need fixed assets will eventually have to go public. If they want to get bigger.
Ivan Glasenberg
I think long-term what has happened in the commodity markets now, most of the commodities have become a spot price. Even iron ore, before which was a long-term type price setting has now become a spot price. BHP decided they started the idea of having a spot price system, everyone seemed to follow. So there’s very few commodities that are not being priced against an LME spot price where it’s by the metal bulletin or whatever it is. Everything is more and more becoming a spot pricing system. However, and that is a question can the funds affect the pricing and how much do the funds and the speculators affect the pricing of the commodities? I believe they do in the short-term, it’s clear that they do. They speculate so they foresee prices going up so they go long the commodity and they buy LME inventories and they take a long position, and they do push up the price. However in the end the fundamentals prevail. It’s a physical commodity, it’s a commodity which we play it’s not just pure paper type commodities with nothing physical backing it up and eventually the fundamentals prevail if people produce too much aluminium, copper, zinc, and there’s too much coming into the LME warehouses, or there’s too much coming into the market, the price will fall. So I think speculators create a market for a while, what I call the froth or whatever it is in the market but eventually the fundamentals prevail. Now how long the delay factor is, it varies in different commodities, at different times depending on demand and supply but long-term the fundamentals of demand/supply rule.
Ivan Glasenberg
Of course that’s a risk. If China fails and China doesn’t grow at 8, 8.5, 9% which everyone expects and it grows at a much slower rate… If it’s not that strong, if it’s 5-6% that means the worlds still got to look at the effect that China consumes 50% of the worlds commodities it means we’ve got to put another 3% growth. However another factor that China [has] - the consumption per capita or commodity in China is way below the western world. So you take China and China consumes I think per barrel of oil one-fourteenth of the rest of the world. Aluminium I think it’s about one-sixth or one-eight. One-sixth of the rest of the world. So China’s got a long way to go. Now of course we’ve all got to watch for the hard landing in China… last week… I was listening to an expert who always gives us information on China with us in the governors meeting in the mining industry and he said ‘Really you don’t need to worry about China because China’s got infrastructure spending, if there’s not big infrastructure spending, there’s going to be housing spending. If there’s not housing spending, you do have the Chinese people saving less and consuming more. So consumer spending is going to increase in China.’ So really he was really positive on China… India is following close on and starting to pick up on China.
Ivan Glasenberg
The thing we’ve got to watch about China… And we asked about ‘Where are the concerns about China, what factors do we have to watch?’ and the two things he said were ‘Number one is the weather, if we have poor weather in China, that means that food prices will go up in China and therefore you’ll get inflation and therefore they’re going to have to pull back the economy, like they did a while ago. The other thing we’ve got to watch in China is Iran. If we do have some problems in Iran, if Israel, America attack Iran, and then we have Iran not exporting oil whatever it is, and you have the oil price rallying, then that will have a big effect on China noting China consumes a massive amount of crude.’
Ivan Glasenberg
[On trading of Glencore shares was stopped about acquiring new acquisitions any comments] Trading wasn’t stopped the shares are still trading. Xstrata made an announcement as you know we own 35% of Xstrata, and we’ve always had a belief that these two companies should be together. So Xstrata made an official announcement today which is well documented.
Ivan Glasenberg
[On buying back his own stock and the difference of being a public rather than a private company] You know it has it’s negatives, as you correctly say you’ve got to deal with the press, you’ve got to answer to analysts. Your results are well known so you do have the volatility of a share price based on your results. But when we IPO’d the company I’ve clearly said that I have no intention to sell my shares, in the company so I’m not day to day worrying about a share price. That is the negative. The positive is spectacular as I said before you’ve got a real capital base, you’re not worrying about capital going out of the country because you’ve got a true equity base, you have paper which you can use to acquire – to grow the company, you can raise money. So it gives you a lot of firepower to do things where you see opportunities, whether it’s organic growth, whether it’s acquiring companies, whether it’s acquiring assets etc. It gives you a lot of flexibility and a lot of power. So I quite enjoy it.
Ivan Glasenberg
I’m not saying we’ve got to own it all.
Ivan Glasenberg
You’ll sacrifice a lot of things in the early part of your career to be successful, but to be ahead of your competitors, you have to work hard. Many people may say that luck is important, but I think you create your own luck by working hard to ensure you don’t miss opportunities.
Ivan Glasenberg
In the end the fundamentals prevail.
Ivan Glasenberg
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