Miners are marking the new year with a fresh round of writedowns, underlining the lingering impact of last year’s plunge in commodity prices and raising troubling questions about when the sinking industry might finally find a bottom.
Anglo American Platinum Ltd., the world’s top platinum miner, got the week off to an ominous start when the South African company announced on Monday that it was knocking down the paper value of its assets by $851-million (U.S.), an amount equal to more than a quarter of the company’s book value.
Its writedown follows Barrick Gold Corp.’s announcement last week that it expects to take a hit of as much as $3-billion on goodwill and asset-impairment charges when it reports earnings next month. Earlier this month, BHP Billiton PLC, the world’s largest miner, unveiled a $7.2-billion writedown on its U.S. shale assets.
Companies write down the value of their assets to reflect the lower earnings power of those holdings in deteriorating market conditions. As commodity prices have swooned, miners have become reluctant experts in the art. The industry as a whole has taken tens of millions of dollars in writedowns since the commodity cycle turned downward with a vengeance in 2012.
It would be tempting to think that the trend must be nearing its end, but the latest charges indicate that at least some asset values still have further to fall.
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