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Day: June 7, 2011

PwC Annual Review of Global Trends in Mining Sector – Mine 2011: The game has changed

07 Jun 2011 

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For a copy of the report click here: Mine 2011: The game has changed

Excutive Summary

Welcome to PwC’s eighth annual review of global trends in the mining industry—Mine. These reviews provide a comprehensive analysis of the financial performance and position of the global mining industry as represented by the Top 40 mining companies by market capitalisation.

Last year we highlighted the growing optimism in the mining industry and demand fundamentals that were driving the industry back to boom times. The 2010 results have delivered on this expectation, but it is clear that the game has changed.

The mining industry has entered a new era. Demand continues to be stoked by strong growth in emerging markets. Supply is increasingly constrained, as development projects become more complex and are typically in more remote, unfamiliar territory. The cost base of the industry has permanently changed as lower grades and shortages of labour take effect.

To keep up with demand, the Top 40 have announced more than $300 billion of capital programs with over $120 billion planned for 2011, more than double the total 2010 spend.

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PwC NEWS RELEASE: Top 40 global mining companies’ total assets could exceed $1 trillion in 2011

For a copy of the report click here: Mine 2011: The game has changed

Largest Canadian-based miners increased revenues by 38% in 2010: PwC report

TORONTO, June 7, 2011—The top 40 global mining companies—including nine headquartered in Canada—increased their total assets to US$943 billion in 2010 and are poised to break through the US$1 trillion mark in 2011 driven by record levels of cash, and property and equipment on company balance sheets, according a new PwC report released today.

The financial results of the Top 40 in 2010 are spectacular. Total revenues increased 32% to US$435 billion, breaking the US$400 billion mark for the first time. Net profit rose 156% to US$110 billion and operating cash flows grew by 59%, leaving more than US$100 billion cash-on-hand at year end.

The report also found the Top 40’s total year-end market capitalization increased 26%, driving up the  market capitalization of the smallest company on the list to US$11 billion in 2010 from US$6.5 billion in 2009.

The top Canadian-based mining firms significantly contributed to the overall Top 40 financial totals. Together, the nine Canadian companies increased revenues by 38%. Net profit increased a staggering 1,536% to US$8.9 billion and operating cash flows grew 224%. However, the 2009 base for comparison is low as a result of Barrick Gold settling its gold sales contracts that year.

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Peruvian election strikes fear into global miners – by Brenda Bouw (Globe and Mail – June 7, 2011)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous impact and influence on Canada’s political and business elite as well as the rest of the country’s print, radio and television media. Brenda Bouw is the Globe’s mining reporter.

The election of a left-wing nationalist as Peru’s next president has panicked investors, who fear the country will join a growing trend of governments squeezing more profits from the resource sector.

Ollanta Humala’s narrow victory Sunday over conservative Keiko Fujimori is expected to result in, at the very least, higher tax and royalty rates for mining companies operating in the mineral-rich nation.

Investors are also fretting that Mr. Humala’s past ties with Venezuela’s president Hugo Chavez will lead to suggestions about nationalizing operations based in Peru. The concerns caused Peru’s stock market to drop by a record 12.5 per cent on Monday, alongside steep selloffs of Canadian and international mining companies with operations in the country.

That’s despite Mr. Humala’s attempt to run a free-market friendly campaign this time around, a shift in stance from his unsuccessful 2006 run for the top job.

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Canada mines discontent among the poor of Africa – Linda McQuaig (Toronto Star – June 7, 2011)

The Toronto Star, which has the largest circulation in Canada, has an enormous impact on Canada’s federal and provincial politics as well as shaping public opinion. lmcquaig@sympatico.ca

While Canadians may think of ourselves as best known for owning the Olympic podium, among Africans we may actually be better known — and not particularly liked — for owning their natural resources.

Once beloved on the continent, Canada is no longer so fondly regarded in Africa.

The new, less enthusiastic view of Canada was vividly illustrated last month when more than 1,500 desperately poor Tanzanian villagers picked up machetes, rocks and hammers and stormed the mining compound of Canadian-owned African Barrick Gold.

The uprising — leading to the shooting deaths of seven of the villagers by police and security forces at the mine — is a startling reminder that theories widely held in the West about the benefits of foreign investment for the developing world are not always shared by people on the receiving end.

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