Mining sector delivers spectacular results for 2005
The global mining sector has delivered another spectacular increase in profits during 2005, one of the key findings of Mine let the good times roll, the third annual review of global trends in the mining industry, released by PricewaterhouseCoopers in early June.
The 40 mining companies included in the analysis — which represent over 80% of the total global industry by market capitalizations — reported a 59% increase in aggregate net profits for 2005, up to $45 billion from $28 billion. This compares with aggregate profits of just $5 billion in 2002. These results prompted the companies to increase the amount returned to shareholders to $16 billion in 2005, with further distributions and buy-backs announced in the early part of 2006.
The report shows that investor confidence in the mining industry and its prospects continued to strengthen. Over the last two years mining stocks have outperformed both the S&P 500 and the Dow Jones Industrial Average by over 300%, and in 2005 alone the industry’s market capitalizations increased 72% to $791 billion.
Commodity price increases, particularly in iron ore, coal, copper and gold, are the main drivers of this outstanding performance. This improvement in profitability masks a 16% increase in operating costs, reflecting continued pressure on many input costs and a strong focus across the industry on maximizing production.
The full report of Mine let the good times roll is available to download at www.pwc.com/mining.