Mining giant Glencore plans to rein in its spending, following sharp falls across commodity prices this year, as analysts warn of a burst commodities bubble. Kirsty Basset reports.
A sharp fall in commodity prices means mining companies are having to re-think their budgets. London-listed miner Glencore, which has seen its share price fall around 40 per cent since the start of the year, is cutting its spending plans. It now has a capital expenditure ceiling of $6 billion for 2015, down from 6.5-6.8 billion announced in February. It's not alone in cutting costs. Earlier this month Rio Tinto said it planned $1 billion in cost cuts. While Anglo American is to cut thousands of jobs in the next few years and may sell assets. As far as the industry outlook is concerned, JP Morgan's David Stubbs says there's not much light at the end of the tunnel. (SOUNDBITE)(ENGLISH) GLOBAL MARKET STRATEGIST DAVID STUBBS SAYING: "There's going to be some restructuring but it won't be enough to reduce supply enough to balance out where it is with demand. I think investors need to prepare themselves for a decade of low commodity prices" Commodities are in the midst of a four year bear market which has only intensified in recent months. (SOUNDBITE)(ENGLISH) GLOBAL MARKET STRATEGIST DAVID STUBBS SAYING: "In some ways it's good that people are finally realising that this is what's going on in the commodities market and are not expecting a rebound to previous highs and a continue of the supercycle. It wasn't a supercycle. It was a bubble. And now it's bursting, and burst conclusively." China's devaluation of the yuan isn't helping. Oil, copper and other commodities tumbled earlier this week on fears a weaker currency will mean China is even less willing to consume.