Five Australian mining companies have been named among the world’s Top 40 miners in Pricewaterhouse Coopers’ (PwC) annual Mine 2021 report, with early forecasts suggesting the industry will record the second highest net profits in 18 years.
According to PwC’s 18th annual report, BHP and Rio Tinto retained their positions as first and second on the list of the Top 40 global mining companies, while Fortescue Metals Group rose six spots on the list to fourth.
Newcrest Mining fell four spots from 14th to 18th, while South32 came in at 35th on the list, down from 28th last year.
According to PwC, based on production and commodity price forecasts, group revenue (excluding trading) for the Top 40 is expected to rise to US$700 billion ($903 billion), up 29 per cent.
BHP, Rio Tinto and Fortescue have distributed their highest ever dividends for the February 2021 reporting period when iron ore prices were lower, according to the report.
PwC global mining leader Paul Bendall said the Top 40 miners find themselves in an enviable position.
“Just as the world pivots to a more sustainable future reliant on a lower-carbon economy, the miners have a chance to think strategically towards a decarbonisation future and ESG agenda, and reap the long-term benefits,” he said.
“One such way is gaining access to materials necessary for customers to realise their bold net-zero targets.”
The report identified that companies with higher ESG ratings returned an average total shareholder return of 34 per cent over the past three years – 10 per cent higher than the general market index.
Bendall said there was undeniable value in top miners taking ESG seriously.
“This isn’t just about doing the right thing and appeasing shareholders, but there are long-term value creation opportunities at the ready for those who bake ESG into their core operating strategies, such as improved access to capital, and riding the wave of an ever-increasing thirst for low-carbon products,” he said.
“The top 40 mining companies have enjoyed tremendous growth in the face of challenging economic conditions, which begs the question: what will they do with their near record levels of free cash flow? There exists a massive opportunity to make a big, bold pivot towards the future – and reap the benefits of doing so.”
Bendall said the next challenge is to shift from short-term adaptation to long-term transformation.
“Miners need to think about how they’ll succeed in a world undergoing profound change due to the pandemic. These decisions will shape the future of the sector for decades to come,” he said.