The biggest mining companies were set to spend around USD244 billion on expansions by 2015. This was according to a Bloomberg report. The said expansions would get Glencore Xstrata Plc's Chief Executive Officer Ivan Glasenberg call to end an oversupply in mineral markets next to impossible.
According to forecasts compiled by Bloomberg, the USD250 billion capital expenditures would mean a 2.4% drop in the previous three year period. The data was based on 20 largest mining companies according to market value. Glasenberg joined other investors who pushed spending cuts after companies had made USD60 billion of write-offs in 18 months.
Mining companies including BHP Billiton Ltd. and Rio Tinto Group told investors that they had become more optimistic for the growth of demands in China and US. The Bloomberg World Mining Index had increased by 16% from a four year low last July.
Catherine Raw, co-manager of BlackRock Inc's USD7 billion World Mining Fund said yesterday, "Institutional shareholders still feel that management need to prove to them that over the long term the discipline associated with capital allocation is there. They could always do more. Shareholders are not releasing the pressure."
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