Mining’s global value slips below US$1 trillion

Continued weak commodity prices and shrinking demand have taken its toll on mining, as the market value for listed miners slips below US$1 trillion.

This dip is the first time the market value of mining’s listed companies has fallen below this level since April 2009, according to SNL Financials Industry Monitor.

New research released by SNL show that the aggregate market capitalisation for the 2684 listed companies tracked in its database at the end of September was only US$934 billion, compared to US$1.03 trillion for the end of August.

This is close to a 10 per cent month-on-month drop.

The development of the industry over the space of the last 12 months paints an even more dire picture.

“The industry's valuation on the world's stock exchanges has fallen over 43 per cent since the middle of last year, and is now only 39 per cent of the US$2.415 trillion valuation achieved in April 2011,” SNL stated in its report.

“On this basis, the industry is worth considerably less than Apple Inc. (US$650 billion) and Google (Alphabet Inc.; US$440 billion). The low point remains November 2008, when the market capitalisation of the then 2390 listed companies was US$656 billion.”

A large chunk of this devaluation comes from the smaller end of the market, with the top 100 largest miners tending to hold their value.

“In periods of greatest turmoil the largest 100 mining companies tend to hold their value better than the remainder of the industry, and so account for a greater percentage of the total valuation,” SNL explained.

These companies are now valued at just under US$800 billion, falling below the US$1 trillion mark at the end of July.

These companies’ share of the industry's aggregate valuation was 85.6% at the end of last month, compared with a low of 84.3% in February 2011 and a high of 93.8% in November 2008.

This elite group’s share of the total market capitalization has stabilized at 86-87% for most of the past three years.

Despite this overall devaluation, exploration and development activity has increased, rising in the September period.

However the overall gloom remains, with a 50 per cent drop in the number of financings by companies with annual revenue of less than US$500 million.

There were only 12 such financings of over US$2 million last month, compared with 24 in August and 36 in June, SNL stated.

This represented the lowest number of financings by exploration companies since at least January 2012; however, the US$171 million raised in September (70 per cent by Canadian companies) was 15 per cent higher than the month before, although still only a third of the US$513 million raised in June.

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.