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Two years ago, I completed the manuscript for my book The Remaking of the Mining Industry. I judged that by 2014 the great commodities boom which started in 2004 was well and truly over and that it was an appropriate moment to take stock of what had happened during the boom years and why.
A lot has happened in the intervening two years. So, with the release of a paperback edition of the book,** I thought it might be interesting to check back on whether some of the assertions made in the book still hold up.
Not entirely unsurprisingly, the industry took a beating through 2015 as the global economy slowed and commodity prices tanked. Companies sought to shore up their balance sheets by squeezing out costs and curtailing exploration and capital spend. In February 2016, BHP Billiton made the landmark announcement it was ending the progressive dividend policy which had been in place for 15 years.
The process of divestment among the global diversified miners, described in the book, continued apace.
BHP Billiton spun off a bundle of assets to create South32. Rio Tinto divested coal assets while Freeport McMoRan sought to offload its stake in Tenke Fungurume in the Democratic Republic of the Congo (DRC) and a share of its Morenci mine in Arizona, US, in addition to the sale of oil and gas assets to Anadarko. Vale has also looked to sell assets to raise cash, these including its potash and coal businesses and possibly a stake in its flagship Carajás iron ore mine.
Glencore, meanwhile, cut back production at some of its more marginal mines and, in September 2015, carried out a capital raising to reduce debt. Anglo American announced the biggest restructuring of all, committing last December, to exit coal, iron ore and nickel and to reduce its portfolio of mines from 55 to 20. In the future, it said, it proposed to focus its business on platinum, diamonds and copper.
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