Resourcing the future: PwC’s 16th annual review of global trends in the mining industry
Judged by traditional metrics, things are looking good for the world’s top miners. In 2018, the world’s 40 largest miners consolidated the stellar performance of 2017. As a group, they increased production, boosted cash flow, paid down debt, and provided returns to shareholders at near record highs. And there was still cash left to increase capital expenditure for the first time in five years. All while providing significant value to stakeholders like employees, governments and communities.
Yet investors seemed unimpressed, at least judging by market returns and valuations. What accounts for this discrepancy? Stock markets are famously futures markets, not present markets. And when investors and other stakeholders look at the future of the mining industry, it is clear they have concerns about the industry’s perception on vital issues such as safety, the environment, technology, and consumer engagement. In spite of the strong operating performance, investors seem to be down on the brand of mining. They question whether the industry can responsibly create sustainable value for all stakeholders.
“One thing is clear - mining requires far more than good financial performance in order to realise value in a sustainable manner.”
We see a continuation of the strong operating performances, and pockets of progress in some of the contemporary factors. What we don’t see are signs of a quantum shift in priorities that will allow the industry to keep pace with changes demanded from stakeholders.
The mining industry will have a window of opportunity over the next several years, created by strong operating fundamentals to adapt more rapidly to the growing and changing expectations of stakeholders.