The market value of critical minerals companies ballooned by $20 billion (or 29%) to $90 billion at the end of 2022, a new PwC report shows.
Three of Australia’s mid-tier 50 mining companies (MT50) focused on lithium finished the year with more than $10 billion in market capitalisation. Interestingly, the values of coal miners increased significantly after June 2022 reporting.
In its half-year industry and financial analysis of Australia’s MT50 for H2 2022, PwC has issued an analysis that complements the firm’s Aussie Mine 2022 Mission Critical report.
PwC says the aggregate market capitalisation of MT50 gold companies also increased 42% to $34.5 billion during the half-year period.
However, highlighting the dichotomy of the mining sector amid the transition to green energy and decarbonisation, the market capitalisation of the MT50 coal companies was a combined $29 billion by year-end, 48% higher than 30 June 2022. This aggregate value was only 1.6 times the December annual EBITDA however. MT50 coal companies had an aggregate net cash position at the end of December of $4 billion compared to $4.5 billion of net borrowings at 30 June.
Coal companies have benefited from record high prices during the period. While prices have since fallen sharply, PwC says they remain relatively strong.
Meanwhile, revenues, earnings, and cash flows during 2022 were significantly higher across the board than previous years, with 5 companies reporting EBITDA earnings over $1 billion. The cash generated from operations has translated into a dramatic shift in gearing.
In the December 2022 half-year period, cash returns to MT50 shareholders increased 9% to a record $3.6 billion after strong earnings from coal and lithium companies. As previously mentioned, the market value of critical minerals companies grew by $20 billion to $90 billion at the end of 2022.
Growth and strong earnings in critical minerals
The market value of the overall MT50 group increased 33% to $162 billion at the end of 2022, a new record level. Lithium producers represented about half of this increase. Four MT50 companies each had a market capitalisation greater than $10 billion.
Virtually all of the 23 MT50 critical minerals companies are actively progressing growth projects, PwC notes. The MT50 includes 10 non-producing companies with advanced projects.
PwC adds that Australian mining companies have a critical role to play in global decarbonisation and significant progress is being made on increasing the supply of critical minerals. However, the firm says much more is needed in order to meet decarbonisation goals.
“This presents enormous opportunities for Australian mining companies. The strength of the long-term tailwinds for critical minerals well exceeds geopolitical risks and the shorter-term global growth challenges.”
Write to Adam Orlando at Mining.com.au
Images: PwC
