Mine Games: Clash of the Commodity Kingpins

Sam Walsh, the mild-mannered Australian CEO of London-based mining giant Rio Tinto Group, insists he remains on cordial terms with Ivan Glasenberg, the brash South African who leads the global mining and commodities trading firm Glencore. Sure, Glasenberg approached Walsh’s boss—Rio Tinto Chairman Jandu Plessis—in July 2014 and proposed a merger that would likely have cost Walsh his job. Sure, Glasenberg doesn’t miss a chance to tell the world that Walsh and his fellow Big Mining executives don’t comprehend the basic economics of supply and demand. Still, Walsh told the Times of London in December, “We’re big boys, and this is business. It’s not personal.”

Except it kind of is. Glasenberg’s argument is that Walsh and his fellow global mining executives “screwed up”—the phrase the commodities tycoon used in 2013—by flooding the world with minerals. Take iron ore, which is responsible for almost half of Rio Tinto’s revenue and more than two-thirds of its pretax profit. Global yearly output for all miners increased more than 25 percent from 2010 through 2014. Over the same period, the price of Australian iron ore exports to China declined 60 percent. That’s not a coincidence, Glasenberg says.