Tom Albanese, former chief executive of Rio Tinto (ASX: RIO), recognises that the miners "didn't react fast enough" to changing consumer sentiment and demand when the market began to turn in mid-2011, which resulted in a number of executives losing their positions at the head of their respective companies.
Whilst Rio had reported record cash flow and profits in August 2011, the miner had assumed that it was reporting pleasing numbers. At the same time however, investors recognised declining economic activity, which saw shares in the big miners sold off en masse as they became nervous about the future. Albanese said "At that point the sentiment changed very quickly – a matter of three weeks – and it never turned. It probably took us 18 months to get that."
Albanese left the company earlier this year following the announcement of a $14 billion writedown. As highlighted by The Australian Financial Review, this writedown was almost entirely on the value of his two most significant acquisitions, which were the Mozambican coal and Alcan aluminium group.
He wasn't the only one within the industry to lose his position. BHP Billiton's (ASX: BHP) Marius Kloppers also left earlier this year and was replaced by Andrew Mackenzie whilst Xstrata's Mick Davis and Vale's Roger Agnelli also left.
Foolish takeaway
Whilst shareholders had been demanding aggressive growth from the miners, they are now pressuring for lower costs, increased productivity as well as improved shareholder returns. This has been the primary focus under each company's respective new management teams.
The mining industry remains a volatile sector and, at today's prices, investors would be wise to wait for a more attractive entry point before exposing them to their portfolios.
