Worst Still Ahead for Mining Industry After Losing $1.4 Trillion – by Jesse Riseborough, Kevin Crowley and Andre Janse Van Vuuren (Bloomberg News – February 11, 2016)


This year looks even worse for an industry decimated by the commodities slump.

When you find yourself in a hole, the saying goes, stop digging. A simple lesson that arguably has bypassed a mining industry that’s wiped out more than $1.4 trillion of shareholder value by digging too many holes around the globe. The industry’s 73 percent plunge from a 2011 peak is far beyond the oil industry’s 49 percent loss during the same time.

Just how long it will take for the world to erode bulging stockpiles of metals, coal and iron ore was the central debate at the mining industry’s biggest investment conference in Cape Town this week, which attracted more than 6,000 top executives, bankers, brokers, analysts, miners and reporters. Here’s what they concluded.

The Worst Is Yet to Come

This year may be the worst yet with prices trending lower for longer, according to Anglo American Chief Executive Officer Mark Cutifani, who says his company should be better prepared “for the winter that inevitably comes after the summer.”

The Australian revealed that since he took on the role 33 months ago the company’s revenue had slumped by an average of $350 million a month.

Rio Tinto Group is also preparing for a tough year, with CEO Sam Walsh predicting on Bloomberg Television on Thursday that distress from the commodities rout will spread to majors. The company joined rivals in scrapping its so-called progressive dividend policy.

For the rest of this article, click here: http://www.bloomberg.com/news/articles/2016-02-10/the-mining-industry-makes-oil-giants-look-great

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