HOLLYWOOD, FLA. – For the first time in four years, the world’s biggest miners are awash in cash, riding a wave of cost cuts and a recovery in raw material prices from coal to zinc last year.
But instead of using their newfound bounty to unveil lavish growth plans, as they did in 2012 just as metals prices started plummeting, the cash is going to more sober uses this time: paying dividends and slashing debt.
Spending on growth projects ranks third in priority, delegates and companies said at a mining industry conference in Florida this week. That raised the prospect of limited mine production increases that could support commodity prices especially for copper and zinc.
“Companies who said they are going to spend more on capital (projects) or do not have a clear dividend policy, they’ve all been penalized (in the stock market),” said Charl Malan, senior analyst at New York-based fund management firm Van Eck Associates.
The world’s four biggest diversified miners, including BHP Billiton Plc and Rio Tinto Plc, last year raked in more than $20 billion in free cash flow before dividends and share buybacks, said Clarksons Platou analyst Jeremy Sussman. That left them with about $30 billion in cash and cash equivalents.
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