As commodities prices rise and costs are contained, there has been an increase in the profits and market cap over the last year for Australia’s mid-tier miners. A report by one of the big fours shows overall market capitalization to $58.7 billion up 28 percent out of the 50 biggest ASX-listed mining companies with market values under $5 billion. Among the 50 miners only three didn’t increase market capitalization.
Strong interest in lithium has been driven by the push to electAric vehicles. In terms of dollar value to the group’s total market capitalization, it is the second biggest contributor to growth. In the 50 mid-tier ASX miners list, there are now seven lithium-related companies.
One of the mining leader Chris Dodd says, ‘for the mid-tier miners due to cost-focused strategies of prior years, they’ve seen another year of stunning results, strong interest in lithium in particular and the upward trend in commodity prices continuing which is used increasingly in industry applications and everyday electronics.’
Of the fourth industrial revolution, this new boom is a seed which has brought with it rising demand for modern conveniences like electric vehicles, lightweight engines, smartphones and next-gen batteries. There is an interest in other metals like nickel, manganese, and rare earth while lithium was a stand out.
Gold is a part of the advanced tech story given investors often flight to gold in times of high uncertainty but this time the strong results are seen which are more reflective of increased global tensions. Of total mid-tier miner revenue, Gold miners now make up 53 percent.
As a result of investment from prior years and recent operating cost discipline, it is a huge positive to see profits soaring back to 2012 levels, says Dodd. Combined with improved commodity prices almost across the board, this has allowed increased productivity has driven increased focus on dividends, debt reduction and capex.
As a proportion of capex has decreased by 12 percent, impairments are up by 56 percent and exploration as a proportion of capex, but operating costs have jumped by 10 percent. For five consecutive years and are now less than one-third of those in 2013, mining engineer enrolments have dropped each year. The broader ASX200, is outperformed by the MT50 group of companies.
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