PwC's Mine 2016 Report
Slower, lower, weaker...but not defeated
- 2015 saw the first collective net loss in the Top 40’s history (US$27B)
- Market capitalisation is down 37% negating all gains from the commodity super-cycle
- High debt sees some miners fighting for survival through asset fire sales
- Focus on costs continues, but so do economic headwinds
2015 was a race to the bottom with many new records set by the world’s 40 largest mining companies including the first ever collective net loss and market capitalisation reduction of 37%.
A 25% year-on-year decline in commodity prices meant mining companies had to continue to find productivity improvements and for some, to fight for survival with asset disposals. $297B was wiped off the market capitalisation of the Top 40 miners, effectively wiping out all gains made during the commodity super-cycle.
Mine is PwC’s annual review of the top trends in the global mining industry.
Our analysis is based on the financial performance of the top 40 global mining companies by market capitalisation.
Mine 2016 also found:
- Investors punished the Top 40 for poor investment and capital management decisions and, in some quarters, for squandering the benefits of the boom.
- Concerns over the 'spot mentality' from shareholders focused on fluctuating commodities prices and short term returns rather than the long term investment horizon required in mining.
- A focus on maximising value from shedding assets as well as mothballing marginal projects or curtailing capacity by Top 40 miners. This is further evidenced by a significant drop off in capex signalling an almost stagnant investment environment.
- A positive focus on cost reduction resulting in a 17% drop in operating costs against a backdrop of higher production volumes and lower input costs – an impressive achievement given the production increases seen during 2015.
Whilst the industry continues to face significant market challenges and constraints, there is still a long term positive outlook. Many of the Top 40 appreciate what is required for the marathon of mining and have their eyes firmly fixed on the long term rewards.
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