PriceWaterhouseCoopers has published its Mine 2011 report, finding a “[global mining] industry that is enjoying spectacular growth, but is also facing new and complex challenges”.

 

The report says the mining industry ‘has entered a new era’ as demand grows in emerging markets. It also found that ‘supply is increasingly constrained, as development projects become more complex and are typically in more remote, unfamiliar territory’.

 

The report acknowledges the growing labour and skills shortages, saying that ‘the cost base of the industry has permanently changed as lower grades and shortages of labour take effect’.

 

Four Australian companies were among the world's Top 40 mining companies: BHP Billiton, Fortescue Metals Group, Newcrest Mining and Rio Tinto.

 

In 2010, revenues for the world's 40 largest Miners increased 32 per cent to a record $435 billion as a result of surging commodity prices and strong production output. The strong top-line results propelled the Miners' net profits to $110 billion – a 156 per cent increase over last year.

 

The report found that emerging markets continue to change the face of the industry by driving demand, and allowing companies to take definitive action on capital projects, mergers and acquisitions. As evidence, the Top 40 announced more than $300 billion of capital programs of which more than $120 billion is planned for 2011, doubling the capital expenditure of 2010.

 

Key findings for the world’s top 40 showed that, despite market instability and dropping confidence, growth remained strong in the sector, as:

• Revenues increased 32% – breaking $400 billion for the first time

• Net profit was up 156% to $110 billion

• Operating cash flows grew 59%, leaving more than $100 billion cash on hand at year end

• Total assets approached $1 trillion

• Net debt reduced to $46 billion, resulting in gearing of only 8%

 

The report concluded that, overall, the market capitalisation has increased by 26% over the past year.

'While some have expressed concern that the market capitalisation of the industry has increased too fast and too much; the jump is attributable largely to balance sheet growth following 2010’s stellar results.’

 

PWC also found that the Minerals and Resource Rent Tax, proposed carbon tax and the planned implementation of a emissions trading scheme (ETS) had continued to cause consternation throughout the Australian mining sector.

 

The full report can be requested from PWC here