PwC: Aussie miners feel the pinch

By Rob Starr, Content Manager, Big4.com

Weaker commodity prices have failed to stop Australia’s top-50 mid tier miners from growing revenues 21 per cent. But a 22 per cent rise in costs and a sharp rise in impairment charges to more than $1 billion triggered a 44 per cent decline in net profits to $1.6 billion from $2.8 billion in 2011.According to PwC’s report, Aussie Mine 2012 – Staying the Course market capitalisations have plunged to $51.8 billion from their March 2011 peak of $75.3 billion – down 31 per cent.

PwC Energy, Utilities and Mining leader Jock O’Callaghan comments:

“Certainly some of the shine has come off the mid-50 but we need to look through the short-term pressure on commodity prices and costs and remind ourselves that China’s growth remains impressive in real dollar terms. China’s new leadership team will have plenty of room to trigger major economic stimulus, if need be. Any benefit would flow through to the mid-tier 50.”

“Our report also puts the commodity price boom into perspective, demonstrating that, in Australian dollar terms, all commodities with the notable exception of gold have returned to levels near those seen in 2007.”

The most significant change to this year’s top-50 has been the emergence of gold miners and the departure of the once-dominant coal companies.

The top-50 now comprises 19 gold producers – up from 11 the year before and the most since the series began. Gold miners now make up 26 per cent of the sector’s value. This reflects the 142 per cent rise in the $US gold price – 90 per cent in Australian dollar terms – over the past five years.