PwC issues Mine 2013: A Confidence Crisis
According to Pricewaterhouse Cooper’s 10th annual review of global trends in the mining industry, Mine 2013: A Confidence Crisis, the global mining industry is facing a crisis in confidence, ending years of outperformance and superior returns. During 2012, the top 40 international mining companies production volumes increased by 6 percent, but softer commodity prices meant that 2012 revenue of $731 billion was only the second year in a decade that mining revenue did not increase.
Operating costs have grown faster than production with cost inflation in double digits. Employee numbers rose 2 percent but average employee costs were up 13 percent. Higher costs to develop lower grade assets in increasingly remote locations led to a 10 percent fall in return on capital to 8 percent. Boards and management have heeded investor calls for greater returns, pushing dividends 9 percent higher to a record $38 billion on a payout ratio that grew from 25 percent in 2011 to 60 percent in 2012. Since 2009, dividends have improved more than 150 percent from $15 billion.
PwC Australia’s mining leader Jock O’Callaghan said the picture has further deteriorated this year. “The first four months of 2013 have been rougher and tougher than at any time in the past decade, with market values plunging $220 billion, or 18 percent, for 37 of the world’s top 40 mining companies. After years of outperformance and superior returns the industry is now facing a crisis in confidence,” O’Callaghan said.
Click here to read the report.
