Australian Metal & Mining – An Overview
Australian regions are blessed with an abundance of resources on their surface, which contribute to the wealth of the nation. Mining activities in Australia has been a significant contributor to the Australian economy. It has been a primary industry having a great share in providing employment, export income, and royalty payments to Australia. Abundance of mining resources is a driving force for industries around the country, especially in regional Australia. The country holds resources of the nine valuables including rutile, bauxite, lithium, iron ore, zircon, zinc, and gold. The Australian Bureau of Statistics data confirmed that the Australian mining sector exports are booming and setting up records every day with second quarter of 2019, reaching an all time high to AUD 37,875 million. Mining accounts for 1.8 per cent of the total workforce in Australia by employing approximately 238,000 persons (ABS trend data).
To know about commodity market movement and the reasons to invest in mining stocks, do read: Things to Be Familiar With Before Fishing for Mining Stocks
Let’s have a look at the few top mining companies
BHP Group Limited (ASX: BHP)
BHP Group Limited (ASX: BHP) is an Australian based, Metal, Mining and Petroleum company. Headquartered in Melbourne, Australia was founded in 1873. Recently on 8 October 2019, the company has arranged a social value briefing session for investors and analyst.
The stock of BHP closed at $35.820 on 11 October 2019, higher by 2.139 per cent from its previous closing price. The company has a market cap of $103.31 billion and approx. $2.95 billion outstanding shares. The 52-week high and low value of the stock is at $42.330 and $29.062, respectively. The stock has generated a negative return of 12.24 per cent in the last six months and a positive return of 8.79 per cent on a year-to-date basis.
On 27 September 2019, the company has announced the fully ranked dividend of $1.137 for last six months with a DRP price of $36.604. Additionally, on 17 September 2019, the company has also announced the proposed dates for the interim Dividend for FY 2020.
Increased in revenue for the year ended on 30 June 2019
Below are the highlights for the financial year ended on 30 June 2019;
- The revenue of the company has increased to US$44.29 billion from previous year same corresponding year
- Profit before tax of the company increased by US$15.01 billion as compared to the US$14.75 billion in FY 2018
- Cash and cash equivalent of the company stood at US$15.6 billion
- The company’s total liabilities have been decreased to US$49.01 billion from US$51.32 billion in FY 2018
- Net operating cash flow from operating activities of the company is US$17.8 billion
- Net Debt of the company decreased by US$1.7 billion to US$9.2 billion
- The total copper production to remain in between 1,705-1820 kt in FY 2020
- Escondida production to remain around 1,160-1,230 kt and production in Pampa Norte to be around 230-250 kt in FY 2020, as the spence growth option continues to progress on schedule and budgets and the initial production targeted in FY 2021
- The Olympic Dam production to remain in between 180-205 kt in FY 2020
Rio Tinto Limited (ASX: RIO)
Rio Tinto Limited is an Australian based, metal and mining company. Headquartered in Melbourne, Australia and founded in 1873. The company has an interest in mining of Coal, Copper, Aluminium, Gold, Iron-ore, uranium etc. Recently, on 24 September 2019, the company has announced David Constable, a non-executive director of the company has been appointed as director of Fluor Corporation, with effect from 20 September 2019.
For the half year ended on 30 June 2019, the company announced a special dividend of 61 US cents per share and on 1 August 2019, an interim dividend of 151 US cents per share.
The stock of RIO closed at $87.970 on ASX on 11 October 2019, rise by 2.332 per cent from its previous closing price. The company has a market cap of $32.64 billion and approx. $371.22 million outstanding shares. The 52-week high and low value of the stock is at $106.922 and $68.169, respectively. The stock has generated a negative return of 11.87 per cent in the last six months and a positive return of 20.96 per cent on a year-to-date basis.
11 per cent increment in underlying EBITDA in H1 2019 ended on 30 June 2019
The company has announced the half-year result for 2019, below are the snapshots of the results;
- The consolidated sales revenue of the company has increased by 4.1 per cent to US$20.72 billion compared to the same period last year
- Underlying EBITDA of the company surged by 19 per cent to US$10.3 billion
- Increase in net debt by US$5.1 billion to US$4.9 billion.
- Free cash flow of US$3.9 billion, increased by 35% because of stable capex and higher operating cash flow
- The company expects the run-rate from mine-to market programme to be approximately US$0.5 billion despite weather impact
- The capital expenditure expected to be around US$6.0 billion in 2019 and around US$6.5 billion in 2020 & 2021
- The tax rate applicable for underlying earning would be 30 per cent in 2019
- The cash costs of Pilbara unit are US$14-15 per wet metric tonne in 2019
- The production guidance for 2019 is unchanged from our second quarter operations review
New Project and Growth Option
The US$2.6 billion Koodaideri mines is progressing to plan, with procurement, engineering and construction activities as scheduled. The company expect the first iron-ore from koodaideri in late 2021. The Robert river joint venture projects (West Angelas C&D and Mesa B, C and H at robe valley) are progressing through the required approval process. The Mesa H project will experience some delays with contingency plans being assessed if required.
South32 Limited (ASX: S32)
South32 Limited is a mining and metals company. The company is engaged in the production of alumina, bauxite aluminium, metallurgical coal, manganese, energy, nickel, silver, lead as well as zinc. The company, which is listed on ASX, JSE and LSE, operates in Australia, as well as in the regions of Southern Africa and South America. Recently on 16 September 2019, the company has announced the date for Annual General Meeting which will be held on 24 October 2019.
The stock of S32 closed at $2.450 on ASX on 11 October 2019, rise by 1.24 per cent from its previous closing price. The company has a market cap of $12.01 billion and approx. $4.96 billion outstanding shares. The 52-week high and low value of the stock is at $4.042 and $2.360, respectively. The stock has generated a negative return of 36.07 per cent in the last six months and a negative return of 25.98 per cent on a year-to-date basis
71 per cent drop in profit after tax
On 22 August 2019, the company declared the financial results for the year ending 30 June 2019, below are the highlights of the result;
The company’s Revenue dropped by 4 per cent to US$7.274 billion compared to the previous corresponding year
Profit after tax of the company dipped by 71 per cent to US$389 million from US$1.332 billion in FY 2018
Underlying earnings of the company decreased by 25 per cent to US$992 million
The company board has decided to pay a final dividend of US 2.8 cents per share (Fully Franked) for the FY 2019
- The company is expecting Worsley Alumina Production of 3,965 kt in FY 2020
- Brazil Alumina Production to be around of 1,330 kt in FY 2020
- Hillside Aluminium and Mozal Aluminium production to be around 720 and 273 kt respectively
- The company also expect depreciation and amortisation expense to reduce to approximately US$735 million
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