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South African strike won’t affect global mining performance

11th July 2014

By: Pimani Baloyi

Creamer Media Writer

  

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While South Africa remains the world’s largest platinum producer, the five-month-long platinum-sector strike – the longest in South African history – will not affect the market capitalisation of the world’s top 40 mining companies in 2014, said professional services firm PwC at the launch of its 2013 mine report, titled ‘Realigning Expectations’.

Subsequently, this will not affect the outcome of the firm’s 2014 mine report.

Speaking at the launch of the 2013 report, PwC energy and mining assurance partner Andries Rossouw told the media the reason was that the platinum sector’s overall contribution to global mining is relatively small, compared with that of other minerals.

“Further, as outlined in the global report, only two South African companies feature in the report – Impala Platinum and Amplats, through the Anglo American group – as none of the other platinum players are big enough to make the top 40 global mining companies list.

“There were more platinum players ten to eleven years ago but, recently, platinum, on a global mining scale, has actually become quite small and is mostly concentrated in South Africa and Southern Africa,” Rossouw explained.

The report analyses 40 of the largest listed mining companies through market capital-isation in several major economies, including those of the UK, the US, Canada, Australia, China/Hong Kong, South Africa, Russia, India, Brazil, Poland, Saudi Arabia and Mexico.

2013 Analysis
PwC energy and mining assurance partner and deputy regional senior partner Dion Shango told the media that PwC’s 2013 report, which covered the period April 1, 2012, to December 31, 2013, found that the top 40 global mining companies’ profits in 2013 were at their lowest in ten years.

The report analysed the world’s 40 largest miners through market capitalisation. Record impairments of $57-billion were registered in 2013, with net profits having declined by 72% to $20-billion. Further, the market capitalisation of the top 40 largest mining companies fell by $280-billion, or 23%, year-on-year in 2013.

Gold mining companies, which were particu- larly affected by declines in the commodity’s price, were the hardest hit, with a 28% decline. The mining sector had an overall loss of $110-billion in market capitalisation, represen-ting 40% of the total 23% year-on-year decline.

Shango noted at the launch that, despite these challenges, the dividends paid by these mining companies continued to increase, adding: “Gross dividends paid increased by 5% in 2013, while dividend yields were up 4%. The total of $41-billion in dividends paid out was double that of gold mining companies’ net profits of $20-billion.”

The 2013 report also found that, for the first time, the majority, or 53%, of the 40 largest mining companies came from emerging mar- kets. The change in the global mining landscape also resulted in a divergence in the collective performance between emerging-market com-panies and their developed-market counterparts.

Collectively, emerging-market mining com-panies contributed aggregate net profits of $24-billion in 2013, while their developed market counterparts suffered an aggregate net loss of $4-billion, impacted on particularly by impairments, the report noted.

About PwC
PwC was created by the merger of two firms, PriceWaterhouseCoopers and Lybrand. The companies have historical roots that date back about 150 years.

PwC has offices in 776 locations across 157 countries, with more than 184 000 employees, who are committed to delivering quality in assurance, tax and advisory services. In Africa, PwC has about 450 partners and more than 8 500 employees across 33 countries.

Edited by Samantha Herbst
Creamer Media Deputy Editor

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