With Indonesia-based coal-mining company PT Bayan Resources now the world’s 40th largest-listed mining firm by market cap (as at 31 December 2018), the greater Asian region – including Australia and the Middle East – is currently home to almost half of the planet’s 40 biggest players, which collectively pulled in revenues of $683 billion last year according to the latest annual industry report from professional services firm PwC.
Despite growing environmental protests, the revenues at the 40 leading miners rose 8 percent last year, and have jumped significantly from the around $500 billion figure recorded in 2016 – with profits also on the up. Measured in EBITDA terms (Earnings Before Interest, Taxes and Amortisation), profitability climbed by $11 billion to a total of $169 billion in 2018, with that number up from $91 billion less than five years ago.
Currently boasting a combined market cap of $849 billion (as at 30 April), half of the industry’s top financial performers are now based in the pan-Asian/APAC region, with two Australian-origin firms and one from China occupying three out of the top five spots: diversified giants BHP Group and Rio Tinto in at one and two, and coal-miner China Shenhua Energy at fifth. Chinese/Hong Kong companies altogether make up one quarter of the list.
Accounting for around $80 billion of the combined top-40 revenues generated last year, BHP and Rio Tinto (joint-UK/Australian dual-listed companies with their headquarters in Melbourne, the latter shared with a second head office in London), continue to hold the top two spots for market cap, followed by Swiss goliath Glencore and rising Brazilian player Vale which climbed into fourth for 2018 (albeit with stocks down by over 14 percent for YDT).
At fifth, the 2005-founded China Shenhua Energy is now the largest coal-mining enterprise in the world, typifying a shift of the commodity (which in 2018 saw revenues up by 12 percent among the list-leaders on the back of a 21 percent price hike) from traditional to emerging companies. Coal India also features among the top-ten by market cap, while outside of new entry PT Bayan, all of the other straight coal players hail from China (their number increasing to six).
With above average economic growth in China, India and Southeast Asia – all expected to continue using coal for their primary energy needs for the time being – demand for the commodity will endure in the near to medium term according to PwC, yet plateau from around 2023 as renewable energies reshape the energy mix. Still, PwC sounds a warning, not just for coal but all miners, despite a forecast of continued strong operating performances in 2019.
“While they appreciate the efforts to improve operations and engineer superior results, it is clear that investors and other stakeholders are concerned that the industry is lagging when it comes to several factors that have not been a traditional focus of the mining industry,” states the report. “These include dealing with emissions, investing in differentiating technology and digitisation, engaging more proactively with consumers and building brand.”
Largest mining companies
Altogether, the greater Asian region, including Western Asia and the Asia Pacific, occupy 19 places on the list, with one entry from Saudi Arabia (Saudi Arabian Mining Company), and five from Australia (South32, Newcrest Mining and Fortescue Metals Group in addition to BHP and Rio Tinto). Outside of Coal India and PT Bayan, and the ten entries from China/Hong Kong, the remaining top-40 Asian mining company was Japan’s Sumitomo Metal Mining Company.