Miners all too often lack a clear purpose and fail to approach investments with the appropriate due diligence, a method that drives shareholder returns lower, according to the chairman of Norilsk Nickel.
Average total shareholder returns of the major miners are down 32% over the last five years, Gareth Penny said, noting that there is more to the situation than just a cyclical market. "As a mining company, you've got to be really clear what your specific purpose is. So many mining companies are opportunity-driven and - particularly this last super cycle - would chase after anything. Fear of missing out drove all sorts of behavior where people invested in a huge number of projects and M&A [mergers and acquisitions] activity, and frankly, we all know the consequences were disastrous," he told Metal Bulletin during an interview on stage at the annual Mining Indaba in Cape Town, South Africa. "Norilsk bought assets in Australia, Africa and other parts of the world, and we don't have any competitive advantage in those countries. They weren't tier-one assets, and all the rest of our assets...