PERTH (miningweekly.com) – Gold continued to remain the main driver of revenues for Australia’s midtier miners, while lithium made significant inroads, new data from advisory firm PricewaterhouseCoopers (PwC) has shown.
In its ‘12th Aussie Mine Report’, which analyses the 50 largest ASX-listed mining companies with a market valuation of under A$5-billion, PwC found that 47 of the 50 midtier (MT50) companies reported an increase in market capitalisation, which was up 28% to A$58.7-billion.
Revenue for the year was also up 13%, with nearly all commodity groups contributing to earnings before interest, taxea, depreciation and amortisation (Ebitda) margins hitting 31%, maintaining near-record levels, PwC said.
“We’ve seen another year of stonking results for the midtier miners due to cost-focused strategies of prior years, the continuing upward trend in commodity prices and strong interest in lithium in particular, which is used in everyday electronics and increasingly in industry applications,” said PwC Australia mining leader Chris Dodd.
“This new boom is the fruit of the Fourth Industrial Revolution, which has brought with it rising demand for modern conveniences like smartphones, electric vehicles, lightweight engines and next-gen batteries. Lithium was a standout, but we’re also seeing interest in other tech metals like manganese, nickel and rare earths.”
Dodd said that the push towards electric vehicles has driven strong interest in lithium, which was the second-biggest contributor to growth in terms of dollar value to the group’s total market capitalisation.
Though this battery mineral was barely mentioned in earlier editions of PwC’s Aussie Mine Report, there are now seven lithium-related companies in the MT50.
“Gold is a part of the advanced tech story, but the strong results we’re seeing there are more reflective of increased global tensions, given investors often flight to gold in times of high uncertainty,” Dodd said on Wednesday.
Gold miners continue to dominate and now account for 53% of total MT50 revenue. Gold miners were also the main contributors to growth in the group’s total market capitalisation and total Ebitda.
“It is a huge positive to see profits soaring back to 2012 levels as a result of investment from prior years and recent operating cost discipline. This has allowed increased productivity and, combined with improved commodity prices almost across the board, has driven increased focus on dividends, debt reduction and capex,” Dodd added.
“The MT50 are healthy and steaming ahead, but they now need to focus on becoming ‘future fit’ to position themselves for long-term positive growth. Despite the recent uptick in growth, challenges remain for the group. Operating costs have jumped by 10%, impairments are up by 56% and exploration as a proportion of capex has decreased by 12%.
“But most concerning is the waning interest in the sector from Australia’s future workforce. Studies show broader industry-relevant tertiary enrolments have been declining in recent years, and mining engineer enrolments have dropped each year for five consecutive years, now plummeting to less than one-third of 2013 enrolments,” Dodd said.
He noted that growing the workforce was critical to long-term growth, but from the current standpoint, future supply was far from where it needs to be.
“The midtier group now need talent with skills in artificial intelligence, data analysis and mechatronics. They need to work hard to remain relevant to future talent and proactively showcase the benefits of a career in mining, especially in the face of heightened competition for a newer age, digitally aligned workforce,” he said.Creamer Media Senior Researcher and Deputy Editor Online