Mine 2012 - The growing disconnect
PwC’s Mine 2012 analyses the financial performance and position of the global mining industry as represented by the top 40 mining companies (including 9 based here in the UK) by market capitalisation.
The top 40 invested $98 billion in capital projects in 2011 and plan for a further $140 billion for 2012 in an effort to increase supply. The market, however, doesn’t seem to be buying the industry’s long-term growth story, which has sent share prices lower−2011 marks the start of the growing disconnect.
- 2011 was a year of great contrast for the mining industry - record profits for the Top 40 of $133bn but market capitalisation fell 25%
- The market does not appear to buy the long-term growth story of the emerging world as the European debt crisis lingers
- While net profits increased, net profit margins remained steady reflecting a changed cost base
- Supply will be a focus for future years as the industry has undergone a structural change in the cost base as cost increase of 25% on previous year
- The industry invested a record $98 billion in capital project in 2011 and plan for a further $140bn in 2012 but shareholders and investors are demanding greater returns of cash.