‘Discipline’ lets miners rein in debt

THE world’s biggest miners have shown commendable discipline in trimming debt but will need to be equally judicious when selecting their next growth targets, a report has found.

After a horror 2015 when a slump in commodity prices dragged the top 40 mining companies globally to a collective loss, they repaired their balance sheets last year, according to a report from PricewaterhouseCoopers.

The top 40 by market value collectively made $US93 billion ($124.5 billion) in debt repayments last year but also reduced capital spending by 41 per cent to $US50 billion.

“It’s likely this caution will continue to play out in 2017, and we will see a trend towards near-field and brownfield development, rather than new exploration or asset acquisition,” PwC Australia mining leader Chris Dodd said. “With the benefit of a reasonably benign outlook ... there’s an opportunity to make the type of sensible decision that can yield benefits over the long term.”

Australia’s biggest iron ore pureplay, Fortescue Metals, cut its net debt to $US4.3 billion by the end of March and this year settled deals to refinance debt out to 2022.