Wednesday, May 7, 2014

Investing in Iron Ore - New Input from PwC


Investing in Iron Ore - New Input from PwC

PricewaterhouseCoopers just released its new report: Mine 2011: The game has changed. This is another source of valuable mining statistics that helps strategic decision making. These documents (this is already the 8th)  “provide a comprehensive analysis of the financial performance and position of the global mining industry as represented by the Top 40 mining companies by market capitalisation.”
 Some comments are already available on the Internet:
And many more to come…
I just want to point some noticeable elements:

First, there is a growing confidence among the management of the companies: “the CEOs hold a higher degree of confidence in the future than we have seen in the last few years.”  But there are expectation for volatility.
 And some other:

  • “A comparison of net assets to the market capitalisation of the Top 40 shows that net assets have remained at 35% of market capitalisation, demonstrating that market capitalisation has only increased by the profits the industry has generated and retained in 2010.”
  •  “Strengthening demand for primary resources, predominantly from emerging economies, has been the big story for 2010. End user need for minerals shows no sign of letting up…”
  •  “Despite record revenue and net profit, margins continue to be impacted by increased operating expenses.
  •  “Recent events however have indicated a growing trend towards the vertical integration of yesteryear. Vertical integration strategies vary, but recent trends show that it has been largely upstream as metals companies and end-users seek to add mining assets, and miners add infrastructure, reintroducing the question of ‘what makes a mining company’?
 Countinuing my earlier discussion about investing in iron ore producers, here we see a good comparison of commodity process, which comes very handy, if as investor, you are facing a decision – where to invest:
 And the other one, with this note “Coal, copper and iron ore account for 63% of Top 40 revenue (2009 - 60%) generated this year. Iron ore revenues increased by $35.8 billion in the year and represented 20% of total revenues, up from 15% in the prior year.”:
In fact, this goes in line with the ideas that expressed in my previous post
A lot of other valuable information is represented in the report that may be downloaded here.

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