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Top 100 Mining Companies: What a difference a year makes

Nothing succeeds like success: unlocking investor value through dominance and diversity.

New readers of this article should be aware that it was published in January 2010 – it seems to have been gaining much readership recently as it must have been picked up by another site which is directing readers to the original.  This is not to detract from the article’s quality and relevance but it is important that readers are aware of when it was written. However the interactive table at the foot of the article is updated with the latest data.

SEE ALSO: Top 10 Miners – A tough year, for CEOs and for stock prices
Published 06 Dec 2012

A good number of recent headlines have dwelt on just how well prices for listed mining companies performed during 2009, but, at the same time, ignore the possibility that Rome wasn’t built in a day. There are two keys to this big investor door, as illustrated by bellwether BHP Billiton, the world’s biggest diversified resources stock.

BHP Billiton’s [BLT:LSE] London price is currently near £21.00 a share, very close to its all time record seen in May 2008. But between then and now, the stock price traded below £8.00 a share, during the months in the aftermath of the collapse of Wall Street’s Lehman Bros., as famously recorded on 15 September 2008. Since then, mainly during 2009, BHP Billiton’s stock price has more than doubled, and may be on the way to a triple, once it has matched its previous all time record.

A good number of lesser mining stocks were all but left for dead during the closing months of 2008, and have staged almighty recoveries. During the past 12 months alone, Teck’s [TCK:NYSE] stock price has increased by more than 1,500%, putting its market value at nearly US$24bn, ranking it as the world’s 20th biggest mining stock, by value.

The other key can be most usefully associated with longer term stock price performance, allied most closely, in turn, with the materially different cash generating ability of various mining subsectors. BHP Billiton’s market value is currently around US$209bn, followed by Vale [VALE:LSE][VALE:NYSE] (US$166bn), and Rio Tinto [RIO:LSE] (US$136bn). The total, at US$510bn, comprises no less than 26% of the aggregate US$2 trillion market value of the world’s biggest 100 mining companies, measured by value.

The factor most common to the three super groups is iron ore; the three account for about two-thirds of the world’s lucrative seaborne iron ore market. Vale used to be the biggest, but in early June 2009, Rio Tinto and BHP Billiton announced an iron ore joint venture for the two companies’ Pilbara, Australia iron ore operations. The value of the full joint venture, now formalised, is no less than US$116bn.

BHP Billiton also operates powerful franchises encompassing two of iron ore’s closest bedfellows, coking coal, and manganese. The group’s significant base metals operations have come to play more of a “swing” role, where many other producers have acted, in effect, to place more metal at the margin, rendering profits and cash flow more vulnerable to price volatility, especially on the downside.

BHP Billiton’s base metals division (which excludes nickel, and aluminium, accounted for separately) posted underlying profits of US$8bn during the financial year to 30 June 2008, before crashing down to US$1.3bn for financial 2009. Underlying profits from nickel crashed from US$3.7bn in 2007 to a loss of more than US$800m in 2009. Aluminium profits fell from US$1.9bn in 2007 to just US$192m in 2009, further reflecting the severe status downgrading of base metals over the past few years.

Measured on associated profits and cash flow generated over time, copper has proven to be the most robust of base metals.  Freeport-McMoRan [FCX:NYSE], the world’s second biggest copper miner, and also a producer of gold, molybdenum and cobalt, has moved into position No 9 among global miners, with a market value close to that of Barrick [ABX:NYSE], the world’s No 1 gold miner, by value and also by output.

 

BHP Billiton,  financial year to 30 June

 

Underlying earnings before interest & tax

US$m

2009

2008

2007

Oil & gas

4,085

5,485

3,014

Aluminium

192

1,465

1,856

Base metals

1,292

7,989

6,875

Diamonds/other

145

189

197

Stainless materials

-854

1,275

3,675

Iron ore

6,229

4,631

2,728

Manganese

1,349

1,644

253

Coking coal

4,711

937

1,247

Steam coal

1,460

1,057

481

Other

-395

-390

-259

Total

18,214

24,282

20,067

 

The so-called commodities supercycle, which ran from early 2002 to peak out between mid-2007 and mid-2008, has largely resuscitated itself over the past year. Over this period, among metals, gold bullion, which fell the least in 2008, has risen the least, at 44%. Palladium, copper, lead and zinc have each risen by more than 100% in dollar terms, assisting in at least the stabilization of cash flows at many mining companies that were left crippled by events during the second half of 2008.

 

METAL PRICES

 

 

 

 

 

Precious, USD/oz

Current

Low*

High*

From low

From high

Gold

1152.63

802.59

1226.56

43.6%

-6.0%

Platinum

1614.25

902.50

1627.38

78.9%

-0.8%

Palladium

435.60

176.00

443.38

147.5%

-1.8%

Silver

18.64

10.35

19.46

80.1%

-4.2%

Industrial, USD/lb

 

 

 

 

 

Copper

3.43

1.39

3.54

147.7%

-2.9%

Aluminium

1.06

0.58

1.09

82.2%

-2.7%

Lead

1.15

0.44

1.22

158.3%

-5.9%

Tin

8.12

4.46

8.18

82.2%

-0.7%

Nickel

8.11

4.20

9.67

93.4%

-16.1%

Zinc

1.17

0.49

1.24

140.5%

-6.0%

* 12-month

 

 

 

 

 

 

Developments in primary aluminium, the world’s biggest base metal market, appear to fortify arguments that diversified miners are likely better longer term investment bets. US-based Alcoa [AA:NYSE], the integrated aluminium-alumina-bauxite giant, ranked as the world’s No 1 miner, by market value, early in 2001, a year ahead of the start of the so-called commodities supercycle. Today Alcoa ranks down at No 26, with a relatively modest market value of US$17bn.

Developments in the global aluminium sector also appear to have been of little significance to Rio Tinto, which in 2007 acquired Alcan for US$38bn in cash. This created the world’s most indebted mining company that would be forced into crisis during 2008. After announcing a series of potentially insane transactions, Rio Tinto announced in June 2009 a general rights issue to raise the equivalent of US$15.2bn, and agreement of the monster US$116bn joint venture with BHP Billiton over the two companies’ West Australian iron ore assets.

Cash, by any name, especially cash generation, remains king. During its latest three financial years (to 30 June), BHP Billiton produced free cash flows totalling US$25bn. Over the past three (calendar) years, Alcoa has produced aggregated negative free cash flow of minus US$3bn. Alcoa has effectively been funding itself via a combination of fresh debt raisings, asset sales, and a rights issue. In a strange association with nickel, but for many different reasons, the aluminium market has permanently changed in the past few years.

 

BHP Billiton*

 

 

 

US$m

FY09

FY08

FY07

Operating cash flow

18,863

17,817

15,957

Capital expenditure

-10,735

-8,908

-7,934

Free cash flow

8,128

8,909

8,023

 

 

 

 

Cash on hand

10,833

4,237

2,449

Debt

-16,419

-12,695

-12,420

Net debt

-5,586

-8,458

-9,971

 

 

 

 

Dividends

-4,563

-3,135

-2,271

* Year to 30 June

 

 

 

 

Going forward, it seems that the masters of the mining universe will remain heavily determined not only by size, but also by size in specific markets. Command performances are most likely to continue coming from those groups which hold sizeable chunks of subsectors characterised by relatively few producers, as seen in seaborne iron ore, coking coal, magnesium, and potash. Established, dominant, players in smaller specialist niches are worth watching, including the likes of Anglo Platinum [AMS:JSE][AMS:LSE], and Sociedad Química (potassium, lithium and iodine).

 

World’s Top 100 Mining Stocks

Ranked here on market value

# Company Stock price From high* From low* Value (USD bn)
1 BHP Billiton GBP 20.83 -4.1% 103.2% 209.11
2 Vale USD 31.33 -2.0% 172.4% 165.70
3 Rio Tinto GBP 35.84 -5.2% 222.3% 135.45
4 Shenhua CNY 34.65 -17.8% 93.6% 83.70
5 Anglo American GBP 28.22 -4.7% 211.5% 60.99
6 Suncor CAD 38.58 -5.4% 82.4% 58.15
7 Xstrata GBP 12.08 -7.3% 318.4% 57.13
8 Barrick USD 41.64 -13.3% 63.0% 40.98
9 Freeport-McMoRan USD 88.09 -2.7% 316.3% 37.87
10 NMDC INR 427.40 -12.6% 205.3% 37.20
11 PotashCorp CAD 126.95 -6.0% 54.5% 36.31
12 Goldcorp USD 42.45 -8.2% 84.4% 31.13
13 Southern Copper USD 36.30 -1.8% 188.1% 30.86
14 Norilsk USD 15.86 -2.3% 351.9% 30.23
15 Mosaic USD 66.31 -2.9% 118.4% 29.52
16 Sasol USD 42.98 -1.0% 88.9% 27.44
17 CSN USD 34.30 -10.1% 189.5% 25.90
18 Anglo Platinum ZAR 807.00 -1.5% 113.5% 25.89
19 Newmont USD 50.18 -11.1% 45.9% 24.11
20 Teck USD 40.86 -1.4% 1465.5% 23.68
21 Chalco CNY 15.45 -25.8% 141.4% 21.68
22 ENRC GBP 9.91 -7.3% 235.8% 20.53
23 Impala ZAR 223.67 -2.2% 108.2% 19.02
24 China Coal CNY 13.94 -17.5% 99.4% 18.69
25 ICL USD 14.75 0.0% 130.5% 18.67
26 Alcoa USD 17.45 -0.9% 251.1% 17.00
27 Newcrest AUD 37.28 -6.2% 34.9% 16.69
28 Sterlite USD 19.60 -2.5% 363.4% 16.47
29 AngloGold Ashanti USD 44.16 -7.1% 96.3% 16.00
30 Antofagasta GBP 10.04 -4.6% 184.6% 15.93
31 Fortescue AUD 5.21 -6.5% 214.8% 14.96
32 Zijin CNY 9.61 -21.8% 155.6% 14.83
33 Kinross USD 20.61 -13.8% 51.3% 14.34
34 Canadian Oil Sands CAD 30.30 -13.2% 82.0% 14.19
35 Kumba Iron Ore ZAR 325.89 -2.1% 156.8% 14.06
36 Shanxi Xishan CNY 38.86 -11.5% 223.6% 13.80
37 Peabody Energy USD 48.76 -6.5% 141.7% 13.06
38 K+S EUR 45.70 -14.3% 59.0% 12.66
39 Kazakhmys GBP 14.65 -6.0% 682.2% 12.62
40 Cameco CAD 32.95 -5.9% 105.8% 12.51
41 Vedanta GBP 27.70 -6.6% 462.2% 12.15
42 Hindustan Zinc INR 1,282.55 -7.3% 323.0% 11.90
43 Sociedad Química USD 43.85 -0.2% 93.9% 11.54
44 Peñoles MXN 297.94 -5.7% 162.1% 11.32
45 Norsk Hydro USD 9.00 -1.4% 224.9% 11.16
46 Agrium USD 69.38 -2.4% 139.2% 10.90
47 Magnitogorsk USD 0.93 0.0% 522.3% 10.43
48 Buenaventura USD 37.69 -11.7% 169.2% 10.36
49 Uralkali USD 24.29 -10.0% 491.0% 10.32
50 Yanzhou Coal CNY 23.65 -9.6% 170.9% 10.25
51 Polyus USD 53.10 -10.6% 130.9% 10.12
52 Consol Energy USD 55.12 -5.0% 145.3% 9.97
53 Gold Fields USD 13.89 -12.5% 87.2% 9.80
54 Jiangxi Copper CNY 40.29 -21.1% 241.4% 9.65
55 Fresnillo GBP 8.21 -12.2% 277.0% 9.47
56 Mechel USD 22.39 -6.5% 774.6% 9.32
57 Yunnan Aluminium CNY 14.93 -16.8% 774.6% 9.32
58 Yamana USD 12.71 -11.6% 119.1% 9.32
59 Agnico-Eagle USD 59.50 -19.6% 39.5% 9.32
60 Eramet EUR 243.15 -10.7% 125.1% 9.27
61 Jinduicheng CNY 19.17 -28.5% 104.7% 9.06
62 Shanxi Lu’an CNY 50.73 -11.8% 266.3% 8.55
63 Shandong Gold CNY 79.11 -15.2% 258.1% 8.24
64 Eldorado USD 15.05 -2.3% 133.7% 8.08
65 Randgold Resources USD 84.97 -5.9% 134.5% 7.65
66 KGHM Polska Miedz PLN 107.00 -3.9% 302.3% 7.59
67 Lihir AUD 3.42 -9.3% 41.9% 7.50
68 Ivanhoe CAD 17.84 -3.5% 457.5% 7.33
69 Sesa Goa INR 406.90 -7.5% 515.1% 7.33
70 First Quantum CAD 94.75 -2.5% 368.6% 7.20
71 Coal & Allied AUD 88.00 -18.9% 30.4% 7.05
72 Hindalco INR 166.85 -7.2% 354.0% 7.01
73 Cliffs Natural USD 52.88 -4.5% 348.1% 6.93
74 Adaro Energy IDR 1,960.00 -3.2% 284.3% 6.84
75 Qinghai CNY 59.97 -10.1% 59.7% 6.74
76 National Aluminium INR 471.30 -10.5% 175.2% 6.67
77 Lonmin GBP 21.32 -3.0% 192.1% 6.62
78 Shanxi Guoyang CNY 46.92 -8.0% 319.7% 6.61
79 Zhongjin Gold CNY 56.95 -19.6% 263.2% 6.59
80 Pingdingshan Tianan CNY 31.44 -22.8% 173.9% 6.43
81 Bumi Resources USD 0.33 -17.5% 1220.0% 6.40
82 Iamgold CAD 17.08 -18.7% 225.3% 6.29
83 Silvinit USD 800.00 0.0% 321.1% 6.26
84 Neyveli Lignite INR 164.95 -2.3% 153.8% 6.08
85 Alpha Natural USD 50.20 -5.9% 245.7% 6.07
86 Silver Wheaton USD 17.45 -2.0% 257.6% 5.97
87 Yunnan Copper USD 30.84 -20.2% 243.8% 5.68
88 China Zhongwang HKD 8.07 -28.6% 46.5% 5.63
89 Exxaro ZAR 110.25 -3.3% 80.7% 5.30
90 Western Mining CNY 14.95 -27.8% 117.0% 5.22
91 ARM ZAR 180.25 -1.0% 109.1% 5.15
92 Banpu THB 612.00 -5.0% 223.8% 5.03
93 CAP CLP 16,153.00 -5.0% 125.4% 4.93
94 SDIC Xinji CNY 17.81 -21.9% 138.1% 4.83
95 Hebei Jinniu CNY 41.48 -16.5% 152.0% 4.79
96 Harmony USD 11.11 -16.2% 37.8% 4.73
97 Guizhou Panjiang CNY 28.64 -23.2% 142.7% 4.63
98 Tambang Batu Bara IDR 18,050.00 -3.0% 179.8% 4.54
99 Arch Coal USD 27.38 -3.4% 132.6% 4.45
100 Kailuan Energy CNY 24.55 -15.3% 285.1% 4.44
Averages/total   -9.1% 227.0% 1947.372
Weighted averages   -7.7% 148.6%  

* 12-month

Source: market data; table compiled by Barry Sergeant

 

 

 
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