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Now in its 19th year, PwC's Mine report examines the performance of the world’s 40 largest mining companies, and the trends impacting the industry.
Amid an accelerating industry-wide transformation, the world’s Top 40 miners posted stellar financial results for 2021. Revenues rose by 32% and net profits soared by 127% on the back of high commodity prices and prudent cost management. Combined with their strong performance in 2020, the Top 40 face the future in excellent financial shape. But how long the big miners can continue their record run is less clear.
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Mining is experiencing unprecedented change in the race to net zero. With the demand for critical minerals surging, operating environments are even more challenging, and competition is increasing.
A new generation of miners are fast positioning themselves to deliver the critical minerals society is demanding. They are highly focused on meeting the evolving expectations of stakeholders and have reaped the rewards of acting quickly in this rapidly changing mining market.
What it means to be a miner is changing, and the Top 40 must keep up with the pace of that change.
Australia's miners in the top 40
Insights at a glance
Financial metrics
- Revenues (excluding trading) are up 32%
- Net profits are up 127%
- Capital expenditures are up 18%
- Dividends are up 130%
- Market capitalisation is up 7%
Critical minerals
Market cap for miners of critical minerals outperformed the Top 40 by between
49% and 147%
Demand for energy transition technologies will create
enormous annual growth for critical minerals
but supply shortages are a near-term risk.
ESG
ESG is no longer optional
It's the minimum operation standard
Deals
Deal values tripled
Deal volume increased by 60%
Gold is the largest deal driver. Critical minerals deals gathering steam.
Explore this year’s key trends shaping the Top 40 and the Australian mining industry
The race to net zero is changing what it means to be a miner. Demand for critical minerals is surging, operating environments are getting more challenging and new players are emerging.
The rapid scaling of the low emission energy systems of the future—solar and wind power, electric vehicles (EVs) and grid-scale batteries—will be highly material-intensive. But providing resources for the energy transition is not simply a matter of mining more of the same materials in the same way. Instead, the world will need more critical minerals and raw materials to power the global economy of the future, and these resources will need to be mined sustainably.
A leading role
Demand for critical minerals is expected to grow significantly over the next three decades. The International Energy Agency estimates that the annual demand for critical minerals from clean energy technologies will surpass US$400bn by 2050, which is equivalent to the annual revenues of the current coal market. This might seem like a long way off, but miners are already struggling to keep up with the demand for critical minerals.
The Top 40 can play a leading role in the world’s clean-energy transition and generate significant stakeholder value while doing so. But they face some challenges.
Committed mine production and primary demand (2020-30)
The emerging ‘new miners’
The miners that are responding to the demand are reaping significant rewards.
In the 12 months through 31 December 2021, the market capitalisation of the Top 5 lithium, graphite and rare earth producers grew by 56%, 101% and 154%, respectively. By comparison, the Top 40’s market capitalisation grew by 7%.
Emerging trend - Miners are moving down supply chains into value-added processes
Albemarle Corp.
Kemerton Lithium Hydroxide Processing Plant
Albemarle, a global specialty chemicals company and one of the world’s largest lithium producers, is constructing a lithium hydroxide processing facility at Kemerton, Western Australia. The Kemerton facility will handle feedstock from Albemarle’s stake in the Greenbushes lithium mine.
Production capacity: 60,000 tonnes per annum lithium hydroxide
Emerging trend - Original equipment manufacturers (OEMs) and end users are partnering directly within mining operations
BHP Nickel West - Tesla
July 2021
BHP entered into a nickel supply agreement with Tesla, from BHP’s Nickel West mine in Australia (one of the world’s lower-emissions nickel mines). BHP and Tesla will look to collaborate on ways to increase sustainability across the battery supply chain.
ESG continues to be a focus and can create a competitive advantage for miners. Miners will see tangible business benefits by re-orienting operations around a value proposition that puts people and planet alongside profit.
For Australian miners, being part of an ethical supply chain, protecting the environment and dealing fairly with communities can help miners win new business and create a premium for their products. In 2021, S&P Global began publishing a ‘green aluminium’ pricing index, showing that customers are willing to pay an extra US$10–$15 per tonne for aluminium made sustainably. These kinds of green premiums will only continue to grow as consumers become more discerning about supply chains and provenance.
Relative performance of companies with ESG focus
As deal activity heats up, the Top 40 are well-placed to position themselves to take advantage of the rising demand for critical minerals. But with competition coming from multiple angles, they'll need to think carefully about their next big moves.
Gold leads the way
In 2021, the value of deals among the Top 40 tripled from 2020, while the number of deals increased by 60%. Gold was the key driver of deal activity, representing about 70% of the total value.
US$2.8bn
Newcrest Mining’s US$2.8bn acquisition of Pretium Resources, announced in November 2021, provides Newcrest with what the company dubbed ‘a Tier 1, large scale, long life, low cost mine in a world class jurisdiction’.
Critical transformation through deals
Compared with 2020, Top 40 deal value for critical minerals doubled, and the number of deals rose more than fivefold.
US$825m
Rio Tinto acquired Rincon Lithium for US$825m in a deal announced in December 2021. Rio Tinto expects lithium demand to grow by 25-35% a year over the next decade.
US$2.5bn
South32 acquired Sumitomo’s flagship copper mine in Chile for US$2.5bn in a deal announced in October 2021. South32 said the acquisition enables the company to reshape its portfolio for ‘a low carbon world’ and increases its exposure ‘to the commodities important to that transition’.
Deals action outside the Top 40
The Top 40 aren’t the only ones making moves in critical minerals. In fact, about half the total M&A value in 2021 happened outside the group.
US$1.9bn
Sandfire Resources' US$1.9bn acquisition of Spanish copper miner Minas de Aguas Teñidas propelled the Australian copper and gold miner to become a leading copper-focused producer.
US$2.8bn
The US$2.8bn merger of Orocobre Limited and Galaxy Resources created Allkem, now one of the world’s largest lithium chemicals companies.
