VANCOUVER — It's no secret that 2013 was a rough year in the mining business, but PwC's 11th annual global trends analysis – entitled Mine 2014: Realigning Expectations – shed some light how just how grim things have gotten for the industry's top players. The report studies the financial performance of the top 40 mining companies by market capitalization, and the results reveal a year marked by steep impairment charges and high turnover in senior management positions.
Miners were again hit hard by falling commodity markets, with "double digit decreases not uncommon across commodity prices." Gold companies felt the biggest strain as bullion prices dropped around 27% during the year. Not surprisingly, equity prices followed suit, with the overall HSBC global mining index declining 23% year-on-year, though PwC notes it could have been worse, as at June 2013 the index was down 34% against December 2012.
The top 40’s aggregate net profit sank 72%, or $52 billion, to a decade low $20 billion, with gold companies accounting for $20 billion in net losses. Only seven of the top 40 increased profits year on year. Operating costs remained the major hurdle despite being a priority for most producers, as costs jumped around 4% during the year.
Market values declined $280 billion in 2013 – a 23% reduction from 2012 – down to $958 billion at December 2013, with gold particularly hard hit. The gold segment lost $110 billion off its market capitalization, which accounts for around 40% of the top 40's overall decline. Diversifieds and coal reportedly "didn’t fare much better, as the sector took a beating."
Read the complete story at NorthernMiner.com/news/mining-profits
Comments