PWC矿业发展报告.ppt

Mine 2011,The game has changedReview of global trendsin the mining industry,Contents,01Executive summary|page 01,02Industry in perspective|page 0203A view from the top|page 1004Nine-year trends 2002-2010|page 1406Financial review|page 2007Reserves|page 3010Glossary|page 3811Top 40 companies analysed|page 3912Explanatory notes for aggregated financial information|page 4013Key contributors to Mine|page 4114Contacting PwC|page 4215Other PwC Mining Publications|page 43Features,PwC,05Vertical integrationno-go or gung-ho!?Page 18,08Whats mine is minePage 34,ing,Mine 2011The game has changed,Featurettes,02The state of Silver|page 0702Emergence of Sovereign Wealth Funds(SWFs)|page 0802Disclosing government payments|page 0904Operating costs and marginsA new base|page 1706Chilean mining clustersAccelerating the development ofworld-class suppliers|page 2406The talent race is back on!|page 2506Mining company returnsrisk vs.reward|page 2506The push for capital expenditures|page 2707Exploration expenditure|page 32,Gold Medal Performance,009 Global Gold Price Survey Report,ecember 2009,09The golden rulesPage 36MineThe game has changed,Mine 2011,The game has changed,01,Executive summary,PwC,1,Welcome to PwCs eighth annual review of global trends in the mining industryMine.These reviewsprovide a comprehensive analysis of the financial performance and position of the global miningindustry as represented by the Top 40 mining companies by market capitalisation.,Last year we highlighted the growing optimism in the miningindustry and demand fundamentals that were driving theindustry back to boom times.The 2010 results have deliveredon this expectation,but it is clear that the game has changed.The mining industry has entered a new era.Demandcontinues to be stoked by strong growth in emergingmarkets.Supply is increasingly constrained,as developmentprojects become more complex and are typically in moreremote,unfamiliar territory.The cost base of the industryhas permanently changed as lower grades and shortages oflabour take effect.To keep up with demand,the Top 40 have announced morethan$300 billion of capital programs with over$120 billionplanned for 2011,more than double the total 2010 spend.While not all will be completed,the sheer size and volume ofthe announced capital projects demonstrates an industrywhere fulfilling seemingly insatiable demand is the top priority.In 2010,despite tones of cautious optimism from CEOs andshort-term fluctuations in the market caused by instabilityacross many areas of the globe,the financial results for theTop 40 were spectacular:Revenues increased 32%breaking$400 billion for thefirst time Net profit was up 156%to$110 billion Operating cash flows grew 59%,leaving more than$100billion cash on hand at year end Total assets approached$1 trillion Net debt reduced to$46 billion,resulting in gearing ofonly 8%However,while commodity prices have increased themargins achieved in the past year are still below the highs of2006 and 2007.Investment in new supply is increasingly focused on emergingmarkets,and by new faces,as customers and governmentsenter the industry with the primary goal of securing supply.Vertical integration into mining by customers that prioritisecertainty of supply over cost,will bring additional supplyonline from non-Tier one assets.The cost curve has shiftedand commodity prices have permanently moved higher.Production for 2010 increased by 5%overall with thebenefits of expansion through the global financial crisis beingrealised by those who continued to invest through the cycle.,Emerging markets continue to change the face of the miningindustry.One sign is the average Total Shareholder Return(TSR)of companies from emerging markets in the Top 40more than doubling the return from the traditional miningcountries over the past four years.Overall the market capitalisation has increased by 26%.While some have expressed concern that the marketcapitalisation of the industry has increased too fast and toomuch;the jump is attributable largely to balance sheetgrowth following 2010s stellar results.The outlook expressed by industry leaders is increasinglypositive,with companies taking definitive action on capitalprojects,as well as mergers and acquisitions.In a view fromthe top,the CEOs note their continuing belief in emergingmarkets,particularly the ongoing growth in China and thenations ability to achieve or exceed the 7%growth targetoutlined in the 12th Five Year Plan.Resource nationalismand stakeholder management occupy a higher degree ofattention from the CEOs,as does the ever increasingcomplexity and sophistication in the industry.With mining continuing to climb up the political priority listat a time of budget deficits and changing economic and socialpriorities,many governments are looking at reforms to theirmining codes,grappling with sustainability issues andrevisiting their approach to taxation and royalties.In whatsmine is mine we are joined by Eurasia Group,which hasprovided an overview of a number of the key drivers for thesetrends in light of a growing focus on corporate transparencyand the interplay between corporates and society.These are interesting times for the mining industry,with everincreasing scrutiny from governments,customers and otherstakeholders.Growing demand for its products,driven byemerging markets,highlights that supply will be the mostsignificant challenge it will face.The shift in balance is apositive one for the mining industry,but it will not be simpleand will take some managing.All of this highlights that thegame has changed.We trust you will find this years publication informative andencourage you to send us your feedback.Tim GoldsmithPwC Global Mining LeaderMine Project LeaderMineThe game has changed,Mine 2011The game has changed02Industry in perspective,2,PwC,3,Game-changing trends,Over the course of the last year,global economic andpolitical trends have changed the industry.The miningindustry finds itself in a new era and there is no turningback.Emerging markets are leading bullish long-termdemand projections while supply remains constrained,with challenges such as declining grade and moreremote locations.The cost curve has shifted up,continuing to put pressure on the industry to maintainfinancial discipline.New players are emerging and theindustry is receiving more attention from its many andvaried stakeholders.The game has changed in the miningindustry.,Leading the way,Mining companies have continued to outperform theoverall market,as consumer sectors dependant ondemand from developed economies struggled torecover.While the industry was hit hard by the globalfinancial crisis,mining companies have led the returnand gone beyond.,Global indices(February 1989=1),9876,54321,0,1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011,Dow JonesFTSE,HSBC Global Mining Index,Source:Bloomberg.,2010 saw real tension in the market as growth,rebounded,offset by a number of incidents that keptcaution and risk on the agenda.Emerging countriescontinued to storm ahead,with demand for resourcesdriven by strong GDP growth,including close to 10%growth in China.,These results were achieved against a backdrop of naturaldisasters,including the Chilean earthquake and floods inAustralia.Political pressure increased with reviews of,MineThe game has changed,20,15,10,1,Mine 2011The game has changed,mining and taxation laws and government interventioninfluencing deals in a number of mining countries such asAustralia,Canada and South Africa.The tension in theMiddle East and continuing concern about Europeansovereign debt have also weighed on markets.Market cap is(almost)backMining market capitalisation continued to rebound in2010,with many players recovering the remainingmarket capitalisation lost during the global financialcrisis and surpassing the level seen at the end of 2007.The total year end market capitalisation of the Top 40increased by 26%,with larger gains generally achievedby the smaller companies.This made it tougher to beincluded in the Top 40,with the market capitalisationrequired to make the list increasing from$6.5 billion in2009 to$11.0 billion in 2010.Undervalued industry?The Price to Earnings(P/E)multiple for the Top 40 hasdeclined in 2010 as profit growth has well exceeded theincrease in market capitalisation.We note that the 2009P/E was unusually high due to historical earnings beingimpacted by impairment charges and lower commodityprices,while market capitalisation is forward looking.,Price/Earnings13025502009 2010Source:Capital IQ,Bloomberg,PwC analysis.Price/Earnings is computed by dividing market capitalisation by profits.2009 Net assets as%of Market Capitalisation,Some commentators have questioned the sustainabilityof the rise in the share prices of mining companies.Acomparison of net assets to the market capitalisation ofthe Top 40 shows that net assets have remained at 35%of market capitalisation,demonstrating that marketcapitalisation has only increased by the profits theindustry has generated and retained in 2010.,Market capNet assets,35%,Source:Capital IQ,Bloomberg,PwC analysis.2010 Net assets as%of Market Capitalisation35%Market capNet assetsSource:Capital IQ,Bloomberg,PwC analysis.,4,PwC,150,100,50,0,5,The super majors step outDuring 2010 we saw the top three miners(BHP Billiton,Vale and Rio Tinto)step clear of the rest of the industry.The market capitalisation of third place Rio Tinto isdouble the size of the next largest player,ChinaShenhua,which declined 25%in value during 2010.Atthe top,BHP Billitons market capitalisation furtherstrengthened,putting it clearly above the rest.Price andproduction increases in iron ore were major drivers ofthe growth by the top three.Top 3 market capitalisation($billion)31 December250200,The drive for growthStrengthening demand for primary resources,predominantly from emerging economies,has been thebig story for 2010.End user need for minerals shows nosign of letting up,especially given the targeted 7%GDPgrowth included in Chinas recently released 12th FiveYear Plan.The plan included significant infrastructurespend,such as the construction of 30,000 km of newrailway line.At the same time,there is the challenge of decliningextraction grades,more geographically remote and/orpolitically challenging regions and the increasing scaleof projects required to generate economic returns.Supplying sufficient resources to meet the growingdemand is a key challenge for the industry.The world continues to need raw materials andmining companies results show this.However,withpressures from a growing number of stakeholders onhow to distribute the benefits,miners have the challengeof delivering on their social commitments and ensuringtheir contributions are both appropriate and properlyunderstood.,BHP Billiton200520062007,200820092010,Vale,Rio Tinto,Source:Capital IQ.MineThe game has changed,PotashCorp,China,Shenhua,Xstrata,Freeport-,McMoRan,Anglo,American,Barrick,Gold,BHP,Billiton,Vale,Rio,Tinto,Coal,India,Mine 2011The game has changed,Key playersThe Top 40 for 2010 saw four companies rejoin the listand three first time entrants.The newly listed Coal Indiawas the largest new entrant,following its IPO in October2010.There has been less volatility in 2010,with onlytwo companies more than doubling their marketcapitalisation and just four decreasing;the largestdecrease being 32%by NMDC.Interestingly all four ofthe decreases were Indian or Chinese companies.Glencore has recently completed its listing in Londonand Hong Kong,creating many headlines in the process.The move by traders,steel companies and others toacquire mining assets makes it more challenging eachyear to determine who the Top 40 mining companies are.Top 10 market capitalisation($billion)31 December 2010250200150,The evolving marketThe challenge for mining companies in a resurgentmarket is to demonstrate that they made the right choicesduring the financial crisis and that they are able to takeadvantage of the upside potential of the industry.Four-year Total Shareholder Return(TSR)data through 2010shows mostly impressive,although uneven,returns fromthe sector.In 2010,there were a number of players that greatlybenefited from volatility in commodity markets,notablycopper and silver,with companies like Silver Wheatonshowing an impressive 160%one year TSR.The difference in returns between emerging marketproducers and those from traditional countries widenedin 2010.The four year TSR for emerging market playersmore than doubled the returns of companies fromtraditional mining countries.This outperformance linksto the wider economic story of faster growth inemerging markets.Even though companies fromtraditional mining countries hold assets around theworld,emerging market players have still outperformed.,Top 40 TSR 20072010100250%50200%0150%100%20092010,Source:Capital IQ.,50%,Reliable performanceStrong demand has made 2010 a stand out year for themining industry.Across the Top 40 there was acumulative 32%increase in revenues,a 72%increase inadjusted EBITDA and a 156%increase in net profit.Much of the industrys good news has been achievedthrough a combination of commodity price andproduction increases.Many analysts would argue that in2010 the Top 40 were simply in the right market at theright time.However,if it is luck,fortune has mostgreatly rewarded those who invested through the cycle,as the value from large capital spend by these companiesis reaping rewards.Financial discipline and management of costs will beimportant in 2011,while companies continue to drivetheir operations to maximise production and returns.6PwC,0%Emerging marketSource:Bloomberg and PwC analysis.,Traditional market,China,Shenhua,Energy,Freeport-,McMoran,PotashCorp,Rio,Tinto,Xstrata,Anglo,American,Barrick,Gold,BHP,Billiton,Vale,7,The 2010 four year TSR for the Top 10 miningcompanies(excluding Coal India which listed in2010)provides insight into challenging performancestories.While a four-year period is arguably a shorttime frame for the industry,we have seen the highsand lows of a commodity cycle,albeit a short one,during this period.The results show the importanceof holding Tier one assets and being the leader inchosen markets.Top 10 TSR 20072010,47Ag107.868The state of Silver,230%180%130%80%30%-20%Note:Coal India figures are excluded due to lack of comparative data as ithas only listed in 2010.Source:Bloomberg and PwC analysis.,Silver made headlines in2010 and Silver Wheatonhad the highest one yearTSR of the Top 40.Investorinterest in a minor metal,commonly considered a by-product by most miners wasenormous.This reinforcesthe story that commoditymarkets have become moredynamic in the last year.The formation of silverETFs five years ago hasclearly driven new interestin the market.From May2006 to early 2011,thelargest of these(iSharesSilver Trust)moved fromholding just over 600tonnes to over 11,000tonnes of silver.,Much of the rise in theprice of silver has been onthe back of speculation,although there are somegrowing c