Aussie Mine - Staying the course

PwC's analysis of this year's mid-tier 50 outlines what has been a trying year for some Aussie mid-tier miners:
  • market capitalisation declined 31% from its March 2011 peak of $75.3 billion to $51.8 billion, and
  • a 22 per cent rise in costs and a sharp rise in impairments charges to more than $1 billion triggered a 44 per cent decline in net profits to $1.6 billion from $2.8 billion in 2011.
However, PwC’s Energy, Utilities & Mining Leader, Jock O'Callaghan, has said that despite the gloom the sector had reason to be optimistic about its future, with China's leadership transition a key influence on the mid-tier's fortunes.

"Certainly some of the shine has come off the mid-50 but we need to look through the short-term pressure on commodity prices and costs and remind ourselves that China’s growth remains impressive in real dollar terms. China’s new leadership team will have plenty of room to trigger major economic stimulus, if need be. Any benefit would flow through to the mid-tier 50."

Staying the course, also reports:
  • The emergence of gold miners and the departure of the once-dominant coal companies is the most significant change to this year’s top-50
  • The entry point for this year's mid-50 has been lowered to $289 million from $463 million last year. Two companies that had previously graduated to the ranks of the majors - Iluka Resources and Alumina - have also rejoined the mid-tier fold.
  • The mid-tier 50 have responded to dwindling reserves and commodity price falls with a welcome return to exploration, increasing exploration spend to $1.8 billion from $1 billion. Plant and equipment investment reached $3.3 billion from $2.2 billion.
Despite the short term challenges facing the mid-tier 50, the future remains bright. The continued emergence of developing nations and increasing wealth that accompanies it will drive this industry for generations. In the face of turbulent times, the mid-tier 50 needs to remain confident and stay the course.

Aussie Mine - Onward and Upward! - Nov 11

Our analysis this year shows that 2011 was a stellar year for the mid-tier 50, with key indicators across the board pointing to healthy growth in a sector which has recovered from the global financial crisis (GFC).

Download publication

Aussie Mine - Nov 11

Aussie Mine: Rise and Shine - Nov 10

This year's analysis presents an interesting foundation for what is anticipated as a return to form as Australian mid-tier miners Rise and Shine. Many mid-tier miners are currently enjoying bullet proof balance sheets, commodity price strength and a responsive and optimistic equity market, perhaps tempered by a strong Australian dollar (A$) and uncertainty around changes to the tax regime. Our analysis will provide further understanding of these key factors.

Download publication

Aussie Mine - Nov 10

Aussie Mine: Road to Recovery - Nov 09

Financial year 2009 will be a hard year to forget. June through December 2008 left an enormous mark on the Australian mining mid-tier 50 and the broader economy as a whole. Share and commodity prices were in free-fall and mining was one of the most GFC-affected sectors. Balance sheet analysis moved from the back of monthly management accounts to comprehensive front and centre analysis. Debt became undesirable to those with too much and almost unobtainable to those with too little. Mines became unprofi table and activities were suspended or ceased.

Download publication

Aussie Mine - Nov 09

Aussie Mine: A tale of two halves - May 09

The Mid-tier 50 experienced a year of two distinct halves during the 2008 calendar year. The early part of the year saw continued buoyancy in the Australian mining sector: commodity prices remained relatively high, companies had little difficulty in raising equity to fund asset purchases, and exploration and consolidation in the industry continued at pace. The Australian public was still keen to reap the rewards of the mining boom, and mining stocks were outperforming other industries on the ASX.

Download publication

Aussie Mine - May 09

Aussie Mine: Reaping the rewards - Jun 08

The Mid-tier 50 sector has again had a spectacular year by any measure. Aggregate market capitalisation has increased by 68.5% for the 50 companies analysed. This is at a time when, in general, global fi nancial markets have been under pressure compared with recent years. Similar to last year, the industry's success has occurred on the back of strong commodity prices and increased production. These factors have resulted in the Mid-tier 50 companies delivering extraordinary shareholder value.

Download publication

Aussie Mine - Jun 08