The fundamental business dynamic of the mining industry is changing. No longer can miners focus on expansion at any price - the so called "volume frenzy" - and simply rely on high commodity prices to maintain profitability and deliver shareholder returns. Rather, fluctuating commodity prices combined with a ballooning cost base have reduced profits and challenged asset values.
This has prompted an urgent need for better capital investment disciplines as well as a closer focus on productivity. Recent senior leadership changes at a number of major mining companies are evidence of this strategic shift as Boards gear up to respond to new priorities.
The latest ABS data (current to Q4 2012) does not yet show the impact of recent restructures and aggressive cost reduction exercises at a macro level. However, PwC expects the industry to continue to target significant productivity gains over the next 12 months, as the industry continues to focus on the task.