Photo by: Bloombeg
KALGOORLIE (miningweekly.com) – Over the last 15 years, the value of Western Australia’s top 100 listed companies has grown by 290%, to some A$131.9-billion, advisory firm Deloitte has reported.
Ahead of the annual Diggers & Dealers conference, Deloitte released its fifteenth anniversary edition of the Western Australian Index, which confirmed the significant role the mining industry has played in the growth of the Western Australian economy over this period.
Deloitte clients and markets partner for Western Australia Tim Richards said that, despite some of the challenges faced in the Western Australian economy over the past 15 years, market capitalisation growth of the top companies as demonstrated by the Deloitte Western Australian Index has been phenomenal.
“When we started out in June 2000, the combined market capitalisation of Western Australia’s top 100 companies was A$34-billiion. Today, that figure sits at A$131.9-billion, an extraordinary result compared with the general performance of equity markets, both locally and globally.
“On the resources front, the top 10 Western Australian resource companies dominated then and dominate now, accounting for 40%, or A$13.6-billion, of the total market capitalisation of the Deloitte WA Index in June 2000, compared to 41.4%, or A$54.6-billion, at the end of June 2015.”
Richards noted that growth aside, the 2015 financial year had still been a challenging year.
The Index shed 11.6%, driven by an overall slowdown in Western Australia’s mining sector and led by unfavourable movements in commodity prices.
“Significantly, the index would have lost more ground if not for the listing of South32 in May which, at the time, added $11.3-billion, or 8.4%, to the market capitalisation of the top 100.
“This was the single largest addition to the index in recent years and a significant vote of confidence in Western Australia as a global resources centre.”
Overall, commodity prices had a disappointing in 2015, largely owing to the supply glut in global commodity markets as production of iron-ore and crude oil, for example, continued to surpass demand.
The price of iron-ore spiralled downward by 36.8% over the past 12 months to hit a ten-year low, trading at less than $50/t, which weighed on the pure-play miners such as Fortescue Metals and Atlas Iron, both of which experienced falls in market capitalisation of 56.1% and 80.9% respectively.
Richards noted that among the resources companies, Northern Star Resources and Sirius Resources, had bucked the trend.
Northern Star increased its market capitalisation by 79.5% on the back of the resource expansion and operational efficiency at its newly acquired Western Australian assets. Sirius Resources’ acquisition by Independence Group in May 2015 saw its market capitalisation increase by 26.2%.
In the energy sector, liquefied natural gas (LNG) increased its market capitalisation by 100% as it continues to build its pipeline of mid-scale LNG projects in Australia, Canada and the US.
Of all the commodities surveyed, crude oil prices were heaviest hit over the past 12 months, with the US shale gas boom lifting production dramatically, while the Organisation for Petroleum Export Companies maintained its production levels. Conversely, uranium was the top performer in 2015, increasing by 29.2% thanks to a rebound in demand from the Asia region.