In 2024, Australia’s mining industry demonstrated remarkable resilience despite significant sectoral shifts, as highlighted in PwC Australia‘s Aussie Mine report.
The report reveals that the total market value of the mid-tier 50 mining companies (MT50) remained stable at $139 billion, showcasing the sector’s adaptability in a dynamic macroeconomic environment.
Marc Upcroft, PwC Australia’s National Mining Leader, emphasised the sector’s robustness, stating: “Despite the challenges faced in 2024, the resilience of the MT50 underscores the strength and adaptability of Australia’s mid-tier mining sector.”
The sector benefitted from record-high gold prices, which now account for nearly 50 per cent of MT50 operating cash flows, marking a shift from coal dominance in FY23.
However, lower prices for lithium and coal have reversed a four-year trend of revenue increases, significantly impacting earnings.
Key financial insights for MT50 in FY24 include:
- Revenue: Decreased by 10 per cent to $52.2 billion.
- EBITDA: Declined by 37 per cent to $18 billion, with margins dropping from 50 per cent to 34 per cent.
- Return on Equity: Fell to 7.5 per cent, aligning closer to long-term averages.
- Capital Expenditure: Increased by 41 per cent to $14.7 billion.
- Net Cash: Nearly depleted, down 99 per cent to $0.1 billion.
The critical minerals sector faced challenges, with its representation in MT50 falling from 52 per cent to 37 per cent.
Market sentiment for these minerals ended FY24 lower than it began, except for copper, which remained strong.
The aggregate market capitalisation of MT50 critical minerals companies fell by 28 per cent, and earnings were down by 61 per cent.
Despite short-term uncertainties, Upcroft highlighted the long-term potential, stating: “There is a vital link between global decarbonisation efforts and opportunities for Australian mining companies.”
Demand for critical minerals is expected to rise significantly to support lower carbon technologies, although supply may struggle to keep pace.
Australia’s potential in critical minerals is substantial but underutilised.
Less than a fifth of current projects are considered investable due to scale and development issues.
Upcroft noted that many projects lack sufficient net present value (NPV) to attract investment.
The report stresses the importance of collaboration and innovation in harnessing Australia’s mineral potential.
Developing mining project clusters and addressing price volatility and volume risk are crucial strategies.
Aligning policy settings with market needs could generate $171 billion in GDP and create nearly 330,000 jobs by 2040.
By addressing these strategic imperatives collaboratively, Australian mining companies are well-positioned to navigate the evolving global economy and achieve sustained growth.
