Amid an accelerating industry-wide transformation, the world’s Top 40 miners posted stellar financial results for 2021, on the back of high commodity prices and prudent cost management, according to the latest report.
The information is contained in PwC Mine 2022 report released on Wednesday. The analysis includes major companies from all parts of the world whose primary business is assessed to be mining.
The report aims to examine the global trends in the mining industry and 40 top global mining companies were reviewed.
According to the report, revenues rose by 32 percent and net profits soared by 127 percent.
“Add these gains to their strong performance in 2020, and the Top 40 face the future in excellent financial shape,” the report said.
Market capitalisation was up 7 percent, capital expenditures rose by 18 percent and dividends increased by 130 percent.
The report said the race to net zero was changing what it meant to be a miner. Demand for critical minerals was surging, operating environments were getting more challenging and new players were emerging.
“Can the Top 40 respond quickly enough to transform themselves and thrive in a net-zero future?” the report said.
The market for mining materials was reconfiguring in fundamental ways. The energy transition and the race to reach net-zero emissions were creating a surge in demand for critical minerals.
The commodities needed to generate low-emission energy were elements such as lithium, nickel, cobalt, and graphite for energy storage; copper and aluminium for energy transmission; and silicon, uranium, and rare earth elements for solar, wind, and nuclear energy generation
On critical mining prices, the report said copper prices increased by 26 percent in 2021. Lithium prices were up 280 percent in 2021. Cobalt prices rose by 119 percent in 2021.
The report said demand for critical minerals was expected to grow significantly over the next three decades.
“The surging demand for critical minerals is transforming what it means to be a miner. For example, some miners are shifting focus towards higher value ‘precursor materials’ rather than comparatively lower-value unrefined or concentrate products,” it said.
The report said with strong balance sheets, and abundant free cash flow, miners had never been better placed to take advantage of new opportunities and ensure sustained outcomes.
“But time is not on their side, and the future will favour those that can deploy their resources with agility, focus, and speed,” it said.
The demand for critical minerals was outstripping supply in the near term, to meet this shortfall, miners would have to develop more mines and pursue net-zero targets which poses a series of choices to miners.
dieketseng.maleke@inl.co.za
BUSINESS REPORT