World’s top 40 miners take profit hits despite stronger M&A activity: PwC report

Drilling underground at AngloGold Ashanti mine in South Africa. Photo: Supplied

Drilling underground at AngloGold Ashanti mine in South Africa. Photo: Supplied

Published Jun 26, 2024


PwC yesterday warned that revenues and net profit for the world’s top 40 mining companies – including BHP, Rio Tinto, Anglo American, Gold Fields and South32, among others – were expected to fall further this year.

Amid a commodity price downturn for some metals such as platinum and lithium, the fluctuations in minerals prices has affected South African producers.

The South African miners have it worse compared to their global competitors as they also have to deal with load shedding, which appears to be ameliorating, and rail and port underperformance by Transnet.

In its Global Mine 2024 report released yesterday, PwC said revenues for the global top 40 miners were expected to fall 6% to $793 billion (R14.5 trillion) this year after falling 7% to $844bn in 2023.

Net profit was, however, likely to be markedly lower this year by some 36% at $56bn compared to 2023.

“The financial performance of the world’s top 40 mining companies was squeezed by falling commodity prices and rising costs,” said PwC.

The plunge in revenues was despite “increases in the production of key commodities” with profits shrinking in 2023.

PwC said this year promised “a continuation of these trends, marking the first time since 2016 that industry revenues will fall for a second consecutive” year.

Crucially though, cyclical and structural issues were compelling the top miners to invest for growth and transformation even as revenues and profit margins come under pressure.

There has also been robust merger and acquisition activity across the industry.

Despite facing disruptions to mining productivity as a result of load shedding, South Africa has been noted by PwC as a bright spot for renewable energy projects.

Anglo American entered into a partnership in 2022 with EDF Renewables to develop a regional renewable energy ecosystem in South Africa, “a country stricken by electricity shortages” in the past few years.

“Envusa Energy, the jointly owned company they formed, plans to develop at least 500 megawatts of solar and wind capacity,” noted the report.

In spite of the difficulties faced by the top mining companies in South Africa and across the world, PwC said “mergers and acquisitions (M&A) remained a crucial strategy for miners” that want to create impact.

Although the number of M&A deals fell in 2023, the values for the year increased and there was also a bump up in deal activity focused on critical minerals.

“But transactions today – and tomorrow – are not simply about gaining scale. They’re about gaining the capabilities and assets that enable companies to collaborate with counterparts in broader industrial ecosystems,” noted the report.

In 2023, the total number of deals among the top 40 world mining firms fell about 15% from 2022, while the total value rose more than 3% to over $64bn.

Additionally, the percentage of deals that involved critical minerals rose to 40% in 2023.

Copper accounted for more than 80% of the total value of critical mineral transactions. Lithium also dominated such deals.

Nonetheless, the drop in prices for coal, lithium, copper and platinum group metals (PGMs) resulted in six companies falling out of the top 40, while the rally in gold and uranium prices propelled six replacements into the index.