BHP BHP Group Limited

By Scott Patterson, John W. Miller and Alexandra Wexler 

CAPE TOWN--For the world's mining elite, the party is over.

Executives of the industry gathered Monday at a 316-year-old winery owned by U.K. giant Anglo American PLC for a night of dancing, drinking fine wine and deal making. But the dancing was subdued, and there were few deals to discuss as a colossal slump in commodity prices cast a pall over the shindig.

"It's a tough time for the industry," Mark Cutifani, chief executive of Anglo American, told partygoers at Vergelegen, the vast winery the company bought during better days in 1987. If miners don't develop "new pathways to success...there will be no future."

Then, a steak dinner was served with the estate's signature wines, and the dance music started.

Investing in African Mining Indaba, the industry's most important conference, kicked off this week in Cape Town with the sector in a state of collapse. Once mighty companies such as Anglo American, Glencore PLC and BHP Billiton Ltd. are scrambling to adapt as their profits plunge and their shares hemorrhage value.

Indaba, as the annual conference is known, was once an unmissable week of top speakers such as former U.K. Prime Minister Tony Blair by day and beachfront parties thrown by Glencore traders in the balmy South African summer air by night.

"You'd get invitations to parties on gold coins," said Nichole McCulloch, managing partner of the Ashton Partnership, a London-based headhunting firm.

This year, Mr. Cutifani was the leading corporate speaker. Most of Glencore's top executives didn't show up.

The tone also is glum at International Petroleum Week, a London conference that draws executives from the world's top energy and trading companies. Oil prices are down more than 70% since June 2014.

Overall attendance at the event is the same this year, organizers said, but a black-tie dinner on Thursday night is expected to draw 13% fewer attendees. "People either are cutting back or they don't want to be seen entertaining," during the downturn, a spokeswoman said.

At Anglo's winery party--sponsored by Indaba's organizers--the company decided not to show their usual highlight movie showing scenes from its sprawling international empire.

Mr. Cutifani's speech focused more on South African rugby, the quality of the Vergelegen's wines and the restoration of local flora than on iron ore or copper markets.

"There were more empty chairs than last year, and Cutifani couldn't find anything positive to say about mining, so he talked about sports and wine," said Rhulani Maluleke, managing director of Hape, a South African mining-services firm with 18 employees.

The grim mood is broadly reflected on the conference floor, where service and technology companies pitch their wares to the world's biggest mining outfits. The Indaba organizers say attendance is down 10% from a year ago as companies have sent fewer delegates.

"The place used to be packed, you couldn't walk from one side of a room to another without running into 10 people you knew," said Tom Albanese, CEO of Indian mining giant Vedanta Resources PLC and former chief of Rio Tinto, who has been attending the conference since the early 2000s.

Deal activity among miners has skidded five years in a row, and few expect it to pick up in 2016, according to a Ernst & Young report released last week.

Mining companies have announced plans to cut tens of thousands of workers in the past year as the prices for what they dig up and sell has plummeted. Copper prices have fallen 28% since last year's peak, while the benchmark price for iron ore delivered to China has plunged 27% over the past year.

Glencore aims to raise at least $10 billion to reduce its debt by eliminating its dividend, mothballing mines, issuing $2.5 billion in new stock and selling assets. Anglo has plans to sharply scale back its business, resulting in the loss of a 85,000 employees.

With mining jobs on the chopping block around the world, and businesses that cater to miners scrambling to find business, attendees struggled to put on a brave face about the future.

"It's less of a party atmosphere," said Chris Griffith, CEO of Anglo American Platinum Ltd., the world's top producer of the precious metal. "It's very somber, and it's somber for a good reason."

Indaba is still seen by African nations hungry for investment as a useful way to lure executives. The Democratic Republic of Congo's mining ministry sent 30 people.

"It's still a good opportunity for us to get business," said Prosper Dawe, investment promotion chief at the Congo's mining ministry.

An Indaba veteran, Mr. Dawe said this year's conference was "timid."

"Normally, this is the conference with the best parties," he said, "the most cultural activities."

There are still parties scheduled, but most are planned to be subdued affairs.

Mr. Griffith called Anglo's party "very necessary."

"We can have important conversations that are not so easy in a presentation-type format like the Indaba," he said. He added that "it certainly doesn't feel like a party to me. It feels like work."

Nicole Friedman in London contributed to this article.

Write to Scott Patterson at scott.patterson@wsj.com, John W. Miller at john.miller@wsj.com and Alexandra Wexler at alexandra.wexler@wsj.com

(END) Dow Jones Newswires

February 09, 2016 13:26 ET (18:26 GMT)

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