FMG joins call for min­ers to con­form

Pilbara News - - News - Pe­ter Klinger

Fortes­cue Met­als Group chief ex­ec­u­tive Nev Power has added his voice to a grow­ing cho­rus of min­ers urg­ing their in­dus­try to be­come “nor­mal busi­nesses” and pri­ori­tise cash flow and div­i­dends over growth.

Min­ers’ fi­nan­cial re­turns were a key fo­cus at the Diggers and Deal­ers Min­ing Fo­rum as com­pa­nies stepped up ef­forts to at­tract and sus­tain in­vestor in­ter­est.

The gold sec­tor has a poor his­tory of share­holder re­turns, in­clud­ing div­i­dend pay­ments, a fact recog­nised by Evo­lu­tion Min­ing ex­ec­u­tive chair­man Jake Klein who urged his peers to act like “nor­mal busi­nesses” with more fis­cal dis­ci­pline.

“The fact we say it is rare (div­i­dend pay­ments) and the fact we haven’t re­ally spo­ken about it much was prob­a­bly a bit of an in­dict­ment on the gold space,” Mr Klein said.

Mr Power, whose ef­forts to slash Fortes­cue’s Pil­bara iron ore cash costs to among the low­est in his sec­tor have si­lenced the com­pany’s crit­ics and safe­guarded its fu­ture, said min­ers needed to learn from other sec­tors, in­clud­ing the les­son of not over­in­vest­ing dur­ing buoy­ant points in the cy­cle.

Fortes­cue’s cost-cut­ting was recog­nised last night when the com­pany was named Dig­ger of the Year at the gala night.

“All com­pa­nies need to fo­cus on re­turns and, to some ex­tent, we need to make sure we are fo­cused on value al­ways rather than just ex­pand­ing to push out pro­duc­tion,” Mr Power said.

“We have been fo­cused on a (div­i­dend) pay­out ra­tio from day one be­cause we recog­nise that it is im­por­tant to re­ward share­hold­ers along the jour­ney.

“And we will be look­ing very care­fully at any in­vest­ments to make sure we get those re­turns.”

North­ern Star Re­sources chief ex­ec­u­tive Bill Bea­ment il­lus­trated the shift in ap­proach, high­light­ing his gold miner had av­er­aged a re­turn on eq­uity of 39 per cent over the past six years and an un­der­ly­ing re­turn on in­vested cap­i­tal of 29 per cent, in­clud­ing 27 per cent in the past 12 months.

Pic­ture: Sharon Smith

FMG chief ex­ec­u­tive Nev Power

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