Investors unimpressed despite performance by top miners

By | 2019-06-11T11:16:20+00:00 June 10th, 2019|News|

The world’s 40 largest mining companies continued to consolidate their stellar performance of the past several years by delivering steady growth in 2018, according to PwC’s ‘Mine 2019’ report. As a group, the Top 40 increased revenue by 8%, buoyed by higher commodity prices and marginally improved production. They also boosted cash flows, paid down debt and provided a record dividend to shareholders of USD43-billion. Forecasts indicate continued steady performance in 2019. Revenue should remain stable, with weaker prices for coal and copper offsetting marginally higher production and higher average prices for iron ore.

Yet investors seemed unimpressed by the Top 40’s result, judging by market valuations, which fell 18% over 2018. While total market capitalisation rose in the first term of this year, it remains 8% down compared to the end of 2017. Over the past 15 years, total shareholders’ return in mining has lagged that of the market as a whole as well as comparable industries such as oil and gas.

Michal Kotzé, PwC Africa Energy Utilities & Resources leader says, “In spite of the strong operating performance of the world’s top miners, there is still more room for improvement for mining to continue to create and realise value in a sustainable manner. Both investors and other stakeholders have concerns about the mining industry’s ability to respond to the risk and uncertainties of a changing world.

“Globally, stakeholders are concerned that the industry is lagging when it comes to a number of factors that have not been a traditional focus of the mining industry. These include dealing with emissions, investing in differentiating technology and digitisation, engaging more proactively with consumers and building brand.

“The mining industry will have a window of opportunity to adapt to the growing and changing expectations of stakeholders. By using technology to operate safely and more efficiently, addressing global concerns and maintaining a disciplined strategy to create ongoing value for its stakeholders, the industry can forge a better future for all beneficiaries of mining.”

Click here for PwC’s full report.