An unparalleled period of soaring commodity prices and economic growth has given way to slowdown and recession. The big question is whether the sudden downturn represents a relatively short-term interruption in growth, or whether it is the signal of a more long-run recession. Mining companies have to balance short-term responses with long-term strategy, weighing the long timescales needed for major infrastructure projects, such as mine development, against sharp downturns in prices and demand.
The mining industry, at first thought to be somewhat insulated from the debt crisis, is now fully impacted amid falling demand, tumbling commodity prices, high operating and capital costs and falling share prices. New mines will be rare. Under-performing mines, or those with cost over-runs will be carefully scrutinized for potential closure. Cash conservation and cost management is the order of the day. Mid and lower tier companies will need further debt/equity to fund development but face constraints in sourcing funds. There will be opportunities for cash rich companies to look beyond the downturn to make strategic acquisitions at bargain prices.
If they are not to be targets, cash strapped companies will need to consider joint ventures with cashed up local or international players, especially from China and India. Companies will need to be rigorous in their option analysis and risk evaluation. Postponement or cancellation can increase costs and leave companies exposed in an upturn.
PricewaterhouseCoopers delivers a range of services to help mining companies address the many challenges they face today and to help them to prepare for the upturn in the future.
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Global mine bulletin: April 2009This edition of
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Total tax contribution: Global study for the mining industryThe first ever
Total tax contribution study for the global mining sector reveals the total taxes of fourteen of the world’s largest mining companies, focusing on their largest operations in a variety of countries.
Finding cost efficiencies in mining operations through effective value driver modellingThis paper highlights Australian mining best practice in both operations cost management and production value maximisation through robust modelling of operational value drivers.
Mining deals: 2008 annual review: Mergers and acquisitions activity in the mining industryAfter the rise comes the fall. The mining industry experienced a violent downward tailspin in the last three months of 2008 which has turned much of the deal-making in the sector upside down. We examine both the rationale behind the overall trends and look at the key individual deals. We look at the year under review, the context of the preceding three years, and ahead to the future direction of deal-making in the sector.
Global mining capability statement 2009PwC is the world’s leading adviser to the mining industry, working with exploration, production and service companies to provide business solutions tailored to the mining sector. This publication discusses the key challenges mining companies face today and how PwC is helping them identify and implement solutions.
Monetisation of coal assets: Briefing paperCoal has long been used as an energy resource traditionally for heating and power generation. However the dynamics and opportunity set for utilising coal is changing. There is increasing convergence and competition amongst different value-chains which means coal may have a more diverse role to play in the energy mix going forward. The climate change agenda and uncertain long term price expectations are causing a re-examination of extraction,production, transportation and end-user markets across a range of fuels. In our briefing paper, we describe the alternative methods for creating value from coal assets, with particular focus on coal bed methane and coal to gas technologies.
Improving safety performance in the Australian mining industry through enhanced reportingThis paper outlines the remarkable progress made in Australia, especially in Queensland with respect to safety performance in the mining industry and how PwC believes that further progress can be achieved by improving the processes involved in capturing, analysing and sharing safety data.
Junior mine 2008: Review of trends in the TSX-V mining industry - PwC CanadaPricewaterhouseCoopers presents our second edition of
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2008 Global gold price survey results2008 has been a strong year for gold. The price started the year at US$846 on January 2 and averaged over US$800. There was significant intra-period volatility in the gold price over the year with prices ranging between US$712 and peaking at US$905 in September. In early December, when this report was written, prices have retreated to US$764.
Global mine bulletin: January 2009It is difficult to comprehend the change the mining world has been through in the last few months. Liquidity and the credit crunch in the western world are certainly part of the reason; however, the slow down in demand from China has been an equally important aspect.
Junior mine 2008: Review of the trends of the AIM mining industry - PwC UKThis review, the fourth annual report on the UK listed junior mining industry, provides an insight into the aggregated performance of the junior mining industry, as represented by 50 of the largest mining companies on the Alternative Investment Market (AIM). The mining companies included in the report represent over 85% of the AIM mining industry by market capitalisation, and so
Junior mine provides a good indicator of the health of the UK’s junior mining industry.
Aussie mine 2008: Reaping the rewards: Review of trends in the Australian mid-tier mining industryThis report provides an overview of the fi nancial performance of the mid-tier mining sector and explores industry issues such as climate change and exploration. It is evident that 2007 was a year that the mid-tier Australian mining sector was reaping the rewards.
Avoiding cost blow-outs and lost time on mining capital projects through effective project stage gating
Delivering major capital projects on schedule and to budget is an increasingly difficult challenge for many mining companies. In 2005, PricewaterhouseCoopers’ global review of major capital projects in the mining industry found that only 2.5 percent of projects could be defined as successful when assessed across the four critical dimensions of: scope, cost, schedule and business benefits. Several of Australia’s coal mining companies, however, have robust capital project management processes in place. Some of these organisations have moved further to the forefront of world’s best practice over the past few years as they look to manage larger project portfolios in a time of volatile market conditions. This paper highlights Australian coal mining industry best practices in various areas of major capital project management.
Intertwined: the physical and the financial: Commodity risk in the oil & gas, power utility and mining sectorsThis publication looks at the new commodity risk challenges facing companies in the oil and gas, power utility and mining industries. It also looks at the specific challenges that arise within each of the industry sectors. Key questions such as the role of trading and hedging within company strategies are examined as well as how best to get key building blocks such as organisational structure, tax, valuation and accounting right. Finally, we conclude by looking at what companies should do to embed effective risk management in this new environment across the whole of their company.
Financial reporting in the mining industry: International financial reporting standardsThis edition of
Financial reporting in the mining industry describes the financial reporting implications of IFRS across a number of areas selected for their particular relevance to the mining industry.
