Aussie Mine Report 2024: Gold shines amid critical mineral volatility

Wednesday, 13 November 2024

AUSTRALIA – Despite significant sector shifts, Australia’s overall mining market value remains robust, presenting a mix of challenges and opportunities for the industry, analysis by PwC Australia reveals. 

PwC Australia’s 19th annual Aussie Mine report shows the total market value of the mid-tier 50 mining companies (MT50) held steady at $139 billion in 2024, reflecting resilience despite a dynamic macroeconomic environment. 

"Despite the challenges faced in 2024, the resilience of the MT50 underscores the strength and adaptability of Australia's mid-tier mining sector," said Marc Upcroft, PwC Australia's National Mining Leader. 

"The record high gold prices have provided a significant boost, but the sector must navigate the volatility in critical minerals with strategic foresight. Lower lithium and coal prices have significantly impacted revenues and earnings, reversing the four-year trend of annual increases."

Gold companies now generate nearly 50% of MT50 operating cash flows, marking a significant shift from coal in FY23. The critical minerals sector lost its dominant position in the MT50 - representing 37% of the 2024 MT50 value, falling from 52% last year.

Key MT50 FY24 Insights

• Revenue: Down 10% to $52.2 billion

• EBITDA: Decreased by 37% to $18 billion, with margins dropping from 50% to 34%

• Return on Equity: Fell to 7.5%, aligning closer to long-term averages

• Capital Expenditure: Increased by 41% to $14.7 billion

• Net Cash: Nearly depleted, down 99% to $0.1 billion

PwC’s analysis finds that market sentiment for most critical minerals finished FY24 lower than at the start—with copper the standout exception. From record highs a year ago, significant share price falls have seen seven critical minerals companies exit the MT50 this year. The aggregate market capitalisation of MT50 critical minerals companies fell by 28% over the year to June 2024, while earnings were 61% lower. 

“Beyond the short-term uncertainty, the big picture for critical minerals is clear. There is a vital link between  global decarbonisation efforts and opportunities for Australian mining companies. For that reason, demand for critical minerals will continue to rise significantly to meet the need for lower carbon technologies. In fact, it will be very challenging for supply to keep pace with demand.”

Australia is well endowed with critical minerals essential for a low carbon economy. However, the PwC analysis shows that less than a fifth of the country’s current critical minerals projects are considered investable. 

“There is currently  a significant gap between Australia's potential and the number of projects ready for investment,” said Mr Upcroft.  

“Additionally, many of these projects lack the necessary scale, with our research indicating that few in the investable universe have a net present value (NPV) greater than $500 million. This suggests that numerous projects are either too small or insufficiently developed to attract substantial investment.”

Collaboration and innovation are at the heart of harnessing this potential according to the report. 

“We need to catalyse private capital by adopting mechanisms that address price volatility and volume risk; and we need to develop mining project clusters to aggregate reserves and resources to achieve economies of scale.”

The analysis points to the increasing complexity and higher stakeholder expectations facing miners - requiring strategic alignment across mining company strategies, customer partnerships, financial markets, government policies, and community cooperation.

“There is an opportunity to generate $171bn in gross domestic product (GDP) and create almost 330,000 jobs by 2040, if we make critical choices to align our policy settings to market needs,” said Mr Upcroft. 

“By addressing these strategic imperatives collaboratively, Australian mining companies are well-positioned to navigate the evolving global economy and achieve sustained growth.”

To read and download Aussie Mine, click here.