PwC Australia: Gold on rise, Lithium and Coal on Wane

Share
The cover of PwC Australia's annual Aussie Mine Analysis.
PwC Australia's annual Aussie Mine analysis shows gold producers gaining ground, as critical minerals and coal mining companies face market cap decline

Australia's mid-tier mining sector is showing market resilience amid significant structural changes, according to analysis from PwC Australia.

The global professional services firm's nineteenth Aussie Mine report, analyses the performance of the MT50 – Australia's top 50 mid-tier mining companies – indicates total market capitalisation remained at $139 billion through 2024, despite substantial commodity price fluctuations.

Marc Upcroft, National Mining Leader at PwC Australia, explains the shifting dynamics: "The MT50 has maintained its position despite market headwinds. Gold price performance has provided support, while the critical minerals segment has experienced significant value erosion."

Structural changes reshape mid-tier mining landscape

The report identifies fundamental changes in sector composition, with gold producers now contributing approximately 50% of MT50 operating cash flows, replacing coal's previous dominance. 

Critical minerals companies, which include producers of lithium, rare earths, and other technology metals, have seen their MT50 value representation decrease to 37% from 52% in the previous year.

Financial metrics across the MT50 show notable changes. Revenue decreased by 10% to $52.2 billion, while EBITDA (earnings before interest, tax, depreciation and amortisation) fell 37% to $18 billion. Margin compression saw EBITDA margins contract from 50% to 34%. Return on Equity moved closer to historical averages at 7.5%, while capital expenditure increased 41% to $14.7 billion.

Report Findings 1

Critical minerals sector faces investment challenges

The Department of Industry, Science and Resources, the Australian government ministry responsible for resources policy, has identified significant national deposits of critical minerals essential for decarbonisation technologies. However, PwC's analysis indicates fewer than 20% of current critical minerals projects meet investment criteria.

Upcroft addresses the development gap: "Current analysis shows a disparity between Australia's resource potential and investment-ready projects. Many developments lack sufficient scale, with few reaching the $500 million net present value threshold required to attract institutional investment."

The analysis examines the role of the Critical Minerals Office, a federal government agency established to support sector development. "Development of mining project clusters could aggregate reserves and achieve economies of scale," Upcroft says. "We require mechanisms addressing price volatility and volume risk to attract private capital."

Report findings 2

Investment and policy alignment essential for growth

The report examines requirements for sector development, including coordination between mining companies, end-users, financial institutions, government departments and community stakeholders. This integration of interests has potential economic implications, according to Upcroft: "Analysis indicates potential GDP contribution of $171 billion and employment creation of 330,000 positions by 2040, contingent on policy settings aligning with market requirements."

Report Findings 3

PwC Australia 2022 report echoes 2024 findings

The findings of PwC’s 2024 report resonate with those of its 2022 report, called ‘Accelerating Australia’s critical minerals opportunity’.

In that, it said Australia urgently needs a “community of solvers” around funding if the nation is to maximise benefits from global demand for its vast reserves of critical minerals, a PwC report says.

The report was co-authored by PwC Critical minerals expert Lachy Haynes, from its Energy Transition team. It set out actions that critical minerals ecosystem stakeholders can take, while ensuring high standards of social and environmental outcomes.

PwC Australia Partner Lachy Haynes

Haynes, a PwC Australia Partner focused on the energy transition, said on LinkedIn at the time: “The report incorporates a range of perspectives we have developed with participants in Australia’s critical minerals industry. 

“Critical minerals underpin the production and performance of the low carbon technologies the world needs to achieve NetZero, and is therefore an issue that affects us all. 

“Australia urgently needs new funding and policy approaches to take advantage of our unique and valuable reserves of critical minerals, while ensuring high standards of environmental and social outcomes.” 
___________________________
Check out the latest issue of Mining Digital and sign up to our global conference series, Manufacturing LIVE 2024. Mining Digital is a BizClik brand. ​​​​​​​

Share

PLACEHOLDER