PwC's 11th annual review of global trends in the mining industry - Mine was hosted by Chris Dodd, Melbourne Office Managing Partner in early July 2014. PwC convened a panel of industry experts to discuss the implications of realigning expectations and to examine whether 2014/15 will see the renewed strategies of miners successfully lift the industry off the bottom by delivering sustainable growth.
A key insight from Tim Goldsmith's presentation was the changing profile of the top 40 companies. For the first time, emerging markets companies account for 53% of the top 40 companies. These companies are focused on growth opportunities while companies operating in developed markets focus on simplifying their businesses. Click here to read the full report.
Panel members included Tim Goldsmith - former PwC global mining leader, James Strong - PwC mining & energy tax leader, Dr John Kunkel - Deputy CEO of the Minerals Council of Australia and Craig Sainsbury - Managing Director Resources, Global Investment Research at Goldman Sachs.
"2013 saw one of the most difficult operating environments for miners in many years with falling commodity prices and rising costs putting a tight squeeze on profits. During the year the Top 40's aggregate net profit sank $52 billion (72%) to a decade low $20 billion; gold companies were responsible for $20 billion of net losses.
As a result market values declined by $280 billion, a 23% reduction on the prior year, now down to $958 billion, with gold unsurprisingly hard hit. Diversifieds and coal didn't fare much better as the sector took a beating. However, despite diminished profitability and shrinking cash, dividend yields from the Top 40 continued to increase, with gross dividends paid up 5% and dividend yields slightly up to 4%.
Collectively the mining industry spent 2013 realigning stakeholder expectations and 2014 will see if the renewed strategies of miners can successfully lift the industry off the bottom by delivering sustainable growth. This analysis is based on the financial performance and position of the global mining industry as represented by the Top 40 mining companies by market capitalisation."