Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr
Issue link: https://emj.epubxp.com/i/142836
NEWS-LEADING DEVELOPMENTS Report: Net Profits for Top 40 Mining Companies Fell 49% in 2012 PricewaterhouseCooper's (PwC) 10th annual review of the aggregated financial results of the world's top 40 mining companies, as measured by market capitalization, shows net profits dropped 49% to $68 billion in 2012 from $134 billion in 2011. The sharp fall came despite year-on-year revenues being slightly up at about $731 billion, against $710 billion in 2011. A 246% increase in impairment charges from $13 billion in 2011 to $45 billion in 2012 was a large contributing factor to the sharp fall in profits. Other factors included lower commodity prices and an escalating cost base. Return on capital employed by the top 40 companies fell to 8% in 2012, its lowest level since 2003. Titled Mine—A Confidence Crisis, the 52-page report examines a wide range of financial and operating metrics for the top 40 companies. The report notes that, despite a turbulent year, the overall yearend 2012 market capitalization for the top 40 of just more than $1.2 trillion was roughly the same as at year-end 2011. From a market capitalization perspective, 2012 was a good year for diversified mining companies. Within the top 40, the top five gains during the year were made by BHP Billiton, Rio Tinto, Xstrata, Grupo Mexico and Inner Mongolia Baotou Steel Rare Earth Hi Tech—three diversified, one copper and one rare earths pro- Source: PricewaterhouseCooper, 2013. 4 E&MJ; • JULY 2013 Source: PricewaterhouseCooper, 2013. ducer. These five companies reported a combined gain in market capitalization of $61 billion. Gold producers, on the other hand, had an especially bad year. Of the five companies whose market capitalization shrank the most in 2012, four were gold producers—Barrick Gold, Anglo Gold Ashanti, Goldcorp and Newmont. In total, the top 40's gold miners lost $29 billion, or 15%, of their market capitalization in 2012. If 2012 was good for some companies and bad for others, the first four months of 2013 were rough across the board, the PwC report states. During these four months, market capitalizations fell for 37 of the top 40 companies, for a total loss of more than $200 billion, or 17%, from year-end 2012. Only Minera Frisco, Mosaic, and Inner Mongolia Yitai Coal had increases in market capitalization during this period. For the top 40's gold miners, the loss in market capitalization during the first four months of 2013 totaled $58 billion and was especially sharp during a significant sell-off in April following the largest one-day drop of gold prices ever. These early 2013 setbacks in the market capitalizations of mining-company stocks occurred while the broader equity markets were rallying and the Dow Jones industrial average was hitting an www.e-mj.com