08 Jun “Commodity prices up in 2016 but miners must remain disciplined” – PwC
Conditions in the mining and commodities sector improved in 2016, but miners must be wary of their costs, according to PwC’s UK mining leader Jason Burkitt, following the release of the network’s Stop. Think…Act – mine 2017 report.
The report took into account the financial performances of the top 40 mining companies along with global trends, and found that profitability was restored after the commodity prices bust continued to besiege the sector in 2015.
Aggregate net profit across the industry reached US$20 billion in 2016, a turnaround of $48 billion on the previous year, while balance sheets were boosted by debt repayments totalling $93 billion.
“The main positive to take from the report is that the sector has acted and fixed the immediate problem of the strained balance sheets,” said Burkitt.
“They’ve become leaner in terms of taking cost out but also have exercised much better capital discipline with much less free cash flow spent on expansionary capex.
“Commodity prices did rise during 2016, but much of this momentum has been recently lost which confirms that miners need to keep an eye on their costs and ensure they remain disciplined with the use of free cash flow.”