PwC says commodity price rise to help miners in 2018

Andries RossouwAccountancy giant PricewaterhouseCoopers said in a report that the 40 largest miners would continue to benefit from the rise in commodity prices in 2018

PwC said that revenue at the 40 largest miners rose 23 per cent to US$600bn, marking a turnabout for the sector after years of low commodity prices.

Globally, miners held back spending on projects and focussed on asset disposals to bulk up their cash positions so as to service debt.

The cost-cutting measures have helped the miners improve margins, cash generating ability and report a 126 per cent jump in net profits in 2017.

“For the world’s Top 40 Miners, 2017 was a remarkable year. We’re expecting the improved performance to continue into 2018 as companies continue to reap the benefits of the upswing in the mining cycle.

“One of the risks currently facing the world’s top miners is the temptation to acquire mineral-producing assets at any price in order to meet rising demand. While we expect capital expenditure to increase next year as companies implement their long-term growth strategies, miners must be careful to maintain discipline and transparency in the allocation of capital,” Michal Kotzé, energy, utilities and mining industry leader for PwC Africa, said.

“In 2018, we expect that favourable market conditions, higher commodity prices and strong internal discipline will produce increased liquidity and balance sheet strength," Andries Rossouw, assurance partner at PwC, said.

‘While we expect to see an increase in value and growth opportunities in 2018, we anticipate that this will be tempered by a continued focus on maintaining a robust and flexible balance sheet,” Rossouw added.

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