PricewaterhouseCoopers LLC has released its annual review of the mining industry, showing that revenues at the Top 40 mining companies jumped 32% to more than $400 billion, net profits were up 156% to $110 billion, operating cash flows grew 59%, and total assets approached $1 billion.
According to the PWC report, “Demand continues to be stoked by strong growth in emerging markets.” To keep up with that demand, the Top 40 have announced over $300 billion of capital programs with over $120 billion planned for 2011. Emerging markets have more than doubled the Total Shareholder Return (TSR) for Top 40 companies, “leading bullish long-term demand projections while supply remains constrained, with challenges such as declining grade and more remote locations.” Increasing demand is mostly responsible for the 32% revenue hike last year as production only grew 5% and couldn’t alone account for such a large increase in revenue.
While prices were up in 2010 with the increase of demand, when considering that the cost base has shifted upward as input costs like energy, capital, and labor have increased, earnings before interest, taxes, depreciation and amortization (EBITDA) are no higher than during the mining boom in 2006 and 2007. Still, for 2010 levels to be the same as peak levels from the boom, and continuing to grow, there’s no denying the investment potential of mining commodities.
Mining commodities to watch:
Miners to watch:
For more analysis and guidance in the white hot precious metals sector, consider a free 14-day trial to our acclaimed Gold & Silver Investment Newsletter.