Top40 mining companies lost R27bn collectively in 2015, says PwC

JOHANNESBURG, June 7 (ANA) – Accounting firm PwC on Tuesday revealed that world’s biggest top 40 mining companies made a collective net loss of $27 billion in 2015 with market capitalisation falling by 37 percent.

PxC said these loses effectively wiped out all the gains made during the commodity super cycle.

According to PwC’s annual mine report released on Tuesday, 2015 was a race to the bottom with many new records set by the world’s 40 largest mining companies.

The report analysed 40 of the largest listed mining companies by market capitalisation.

Michal Kotzé, mining industry leader for PwC Africa, said last year was undoubtedly challenging for the mining sector.

“The Top 40 experienced their first ever collective net loss, their lowest return on capital employed, a significant drop in market capitalisation, and an overall decline in liquidity with the result that the Top 40 were more vulnerable and carrying heavier debt loads than in prior years,” Kotzé said in a statement.

Kotzé added that while many miners may be down, “they are certainly not out”.

“We are also seeing shareholders persist with a short-term focus, impacting the capital available for investment and, as a result, constraining options for growth.”

The PwC report found that investors punished the Top 40 for poor investment and capital management decisions, and in some quarters for squandering the benefits of the boom.

The PwC 2016 Mine Report also found China was “not the industry hero”.

“While China is still critical to the success of the mining industry, accounting for about 40 percent of overall commodity demand, it can no longer be relied on to supercharge returns,” Andries Rossouw, assurance partner at PwC said.

“As the country moves from a manufacturing based economy to a services-based economy the previously rampant demand for commodities will still not resume with the same intensity. Despite this shift, the number of Chinese mining companies in the Top 40 continued to increase from nine to 12.”

– African News Agency (ANA)

Disclaimer: This story is pulled directly from the African News Agency wire, and has not been edited by Mail & Guardian staff. The M&G does not accept responsibility for errors in any statement, quote or extract that may be contained therein.

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