Saturday, April 13, 2013

Mining: The Game has Changed

Revenue up by 32% to $400 billion, profit up by 156% to $110 billion, total assets approaching $1 trillion... as the numbers suggest the global mining industry is on a roll once again. And that’s despite all words of caution from the experts. Escalating commodity prices and increased production to meet the rising demand from developing countries has certainly done the trick for the miners. by karan arora

Miners on a high
Despite short term fluctuations in the market, the financial results of the top mining companies remained spectacular in 2010. With a total of over $400 billion, cumulative revenue (Top 40) of the global mining industry witnessed its highest level in the past decade. However, the revenue composition of the miners definitely witnessed a change as commodity prices sky-rocketed last year. In fact, with a price rise of 111% last year, iron ore’s share in overall revenue of the industry increased from 15% in 2009 to almost 20% in 2010. Such price rise also helped miners to book higher margins as the bottomline of the Top 4o in the industry surged by a mind-boggling 156% during the year. A 51% rise in production too helped the miners.

Focus is back on exploration
With demand picking up in the global market, miners have again increased their investment in exploration. According to Metals Economics Group’s World Exploration Trends 2011, the total global spend jumped to $12.1 billion in 2010, up from $8.4 billion in 2009. And interestingly, the top 40 miners took lead in this as they contributed to just less than 50% of the total exploration expenditure last year. However, gold and base metals remained the highlight of the year as 84% of the exploration expenditure was made in them only. But then, a stiff price rise in these commodities motivated the mining companies to enter into a race in order to control more and more mines of these commodities to have a better future.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
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