Mining execs slip down Rich List rankings

Mining executives have slipped down the Rich List rankings after yet another punishing year for an industry that remains a pillar for South Africa’s economy in terms of foreign-exchange earnings.

The collapse in commodity prices has eaten away the wealth of leading mining bosses such as Glencore CEO Ivan Glasenberg. 

The value of his 8.31% stake in the company has more than halved to R24.9-billion in November from R61.4-billion a year ago.

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Glasenberg now drops to second place, making way for the retail titan Christo Wiese, who is now worth about R104.8-billion from just R35.9-billion last year.

African Rainbow Minerals executive chairman Patrice Motsepe has slipped to 18th position from fifth in the past 12 months after his fortune dropped to R3.8-billion from R11.8-billion.

Mining executives are few and far between in this year’s rankings, which are dominated by executives from the industrial and financial sectors — at least in the top 20.

The unrelenting drop in commodity prices such as copper, which has a wide industrial application, has pushed many mining companies into a corner in terms of their operational performance.

Glencore suffered a net loss of $676-million (about R9.7-billion) in the six months to June this year and has subsequently announced a raft of measures, including the suspension of its dividend, to deal with weak markets.

African Rainbow Minerals suffered a 58% drop in its headline earnings in the year to June, but still managed to pay a dividend.

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In contrast, companies with relatively defensive earnings streams, such as global brewing conglomerate SABMiller and pharmaceutical group Aspen Pharmacare, have navigated the stormy waters  better as the world economy battles to fully recover from the 2008-09 global economic recession. 

Assore chairman Desmond Sacco, in 24th position this year, has not been spared the resources rout after his riches plummeted to R2.2-billion from R6-billion.

Outgoing Exxaro Resources CEO Sipho Nkosi has dropped to 91st from 36th after the value of his investments dipped to R437-million from R1-billion.

Nedbank Corporate and Investment Banking analysts said in a research note that the fate of commodity prices partly rested on the direction of the  dollar as the US Federal Reserve looks to raise interest rates this month.  Most commodities are priced and traded in the US currency, which  has been very strong in recent months because of the anticipated increase in rates in the world’s largest economy.

This has made commodities expensive for buyers using weaker currencies.

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The dollar index, which measures the US unit against a basket of major currencies such as the euro, has appreciated by 14% from a year ago.

It is unclear, though, if the upward march of the dollar will continue once the Fed pulls the trigger on rates.

“Excess supply in energy markets as well as base metals will continue to weigh on market dynamics,” the Nedbank analysts noted. 

The supply and demand scenario for commodities poses an even bigger challenge heading into 2016.

It has been a costly exercise for those who thought that metal prices would bottom out this year. Many of these are languishing at multi-year lows.

These have  translated into a spectacular destruction of wealth, with some big-name companies losing more than 50% of their market values on the JSE this year.

But analysts believe some mining executives will reap the benefits of restructuring their operations when the commodity cycle turns for the better.