WORLD’S TOP MINERS CONSOLIDATE STELLAR PERFORMANCE

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.

The report says as a group, the Top 40 increased revenue by 8 percent, 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 $43 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,” the report says

The report says investors seemed unimpressed by the Top 40’s result, judging by market valuations, which fell 18 percent over 2018.

While total market capitalisation rose in the first term of this year, it remains 8 percent down compared to the end of 2017, the report observes.

Over the past 15 years, the report says, total shareholders’ return in mining had lagged that of the market as a whole as well as comparable industries such as oil and gas.

PwC Africa Energy Utilities & Resources leader, Michal Kotzé, said in spite of the strong operating performance of the world’s top miners, there was still more room for improvement for mining to continue to create and realise value in a sustainable manner.

Mr Kotzé said both investors and other stakeholders had 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,” he said

Mr Kotzé said the mining industry would have a window of opportunity to adapt to the growing and changing expectations of stakeholders.

“By utilising 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.” He said

“Gold mining companies need to be rigorous and disciplined with prospective deals. With substantially all the value generated by mergers and acquisitions between 2005 and 2012 now lost, investors are still reeling from past transactions where buyers overpaid for assets,” Mr Kotzé said