The chief executives of the world’s three largest mining companies have decided to bow out this year, prompting speculation that they are quitting before the commodities bubble bursts.

The mining industry is plagued with self-doubt at present as executives try to determine whether the current boom is part of a normal economic cycle or whether it is something special.

The departures of Tony Trahar, Leigh Clifford and Chip Goodyear from Anglo American, Rio Tinto and BHP Billiton respectively seem to suggest that the industry’s leaders are backing a short-lived boom.

By “retiring” this year, they leave companies that are reporting record profits and handing back billions of dollars to shareholders.

Their legacies are ensured and adulation is guaranteed. Also, if the bubble does burst, it will be their successors who end up dealing with irate investors and dwindling bonuses.

However, only last week at the World Economic Forum in Davos, the leaders of the mining industry agreed that the bubble was not about to burst. There may be temporary declines in certain raw materials due to local factors, but the overall trend will remain upwards.

The super-cycle theory is based on the premise that more than two billion Chinese and Indian consumers are joining the world economy. As these countries grow, they will need the raw materials that the likes of BHP and Rio Tinto dig out of the ground.

Chinese growth has already pushed all the big metals to record prices, but nobody is quite sure whether this demand will remain or whether it is simply another short-term economic cycle.

The Davos meeting concluded that companies should start to invest with long-term confidence, but there is little evidence that anybody is seriously heeding this advice.

Companies continue to talk about prudent investment and BHP and Rio, in particular, are concentrating on expanding their existing production facilities rather than opening new mines.

It appears that while the industry hopes that it is in a super-cycle, nobody is betting on this really being the case.

Chip Goodyear’s statements yesterday emphasised this uncertainty. He announced a $10 billion share buyback and record interim profits of $6.2 billion. He added: “I do think about those chief executives of resource companies in the 1970s and 1990s who never got to experience anything like this.” Yet then he revealed that he would be leaving the company in the middle of this unprecedented boom.

Mr Goodyear also extolled the virtues of the super-cycle theory, saying: “What we are seeing now is several billion people joining the global economy.” Then he refused to invest more simply because commodity prices were booming. Unfortunately for investors, the truth of the super-cycle theory will be revealed only once it is too late.

Emerging from the pits

Leigh Clifford — Rio Tinto
Chief executive since 2000 Due to leave September, aged 60 Retiring to his native Australia Being replaced by Tom Albanese

Tony Trahar — Anglo American
Chief executive since 2000 Due to go March, aged 57 Leaving after rumours of dispute with board over £5bn Mondi demerger Being replaced by Cynthia Carroll

Chip Goodyear — BHP
Chief executive since 1999 Leaving by end of 2007, aged 47 Reasons for leaving “part-personal, part-professional” Widely expected to return to US. Replacement undecided

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