Total rated mining sector profits reach $230 billion in 2020: Moody’s report

A new report from ratings agency Moody’s has found that the 130 rated issuers in the mining industry have improved their cumulative profitability since the 2015-16 market downturn.

The total earnings (EBITDA) of the 130 rated mining companies reached US$230 billion in the 12 months ending September 2020, resembling the third-largest total among the global sectors, after oil & gas and pharmaceuticals.

Total debts in the period amounted to $670 billion, but the debt-to-earnings ratio has been cut substantially since 2015, going from 3.8 at the end of the downcycle to 2.7 for the year ending September 2020.

Moody’s said the improving financials for major miners is a result of a strategy of de-risking operations following the downturn by forming joint ventures on large projects, having a disciplined approach to dividends, liability management and projects requiring significant capital outlays.

The company added that decarbonisation is benefitting the industry, as there are no clear substitutes for mining, either for inputs or end products. New markets will also strain supply in the near term.

Some of the issues affecting the industry over the next decade include rising resource nationalism, which could see governments demanding a bigger share of the economics of their natural resources through taxes, royalties and ownership of mines.