◎ Wang Zhi / Compilation
However, although the mining company profits high, Fixed is expected to keep restraints in capital expenditures, and focus on the use of additional profits created by two years today.
The report said that the mining industry is in the era of technological subversion, consumption mode, and environmental, social and governance (ESG) factors, which shape the future of market participants and decided. Mining company success or not.
Large mining companies can better deal with the impact of the epidemic, mainly due to the increase in metal prices after the first quarter of 2020. For example, the net profit of 2020 fiscal year increased by 22% year-on-year, while the year-on-year fiscal year fell by 41% year-on-year. In addition, the United States and the United States resources, the free port, the Norlisk nickel industry and the freshwater valley have also achieved a significant growth in net profit in 2020.
Fitch expects that the financial results of these companies will be more powerful in 2021-2022.
Under strong performance, the yield and capital expenditure guidance in 2021 and 2022 have increased in 2020 compared to 2020. According to Huixian’s data, as of April this year, the top 30 mining companies in 2021 capital expenditures increased by about 23.7% year-on-year, and this data was basically stagnant in 2020.
Fitch said that the updated capital expenditure guidance reflects the overall idea of \u200b\u200bthe mining company’s more robust financial status and production activities to the pre-plan level, provided that project operations are no longer limited by the epidemic.
Overall, in the past decade, the exploration expenditure has slowed down because most of the high-value mines that are easy to commercialize are acquired by large mining companies, while the remaining deposits are more difficult, and the cost is also higher. In addition, after a large commodity super cycle, mining companies in debt and financial crisis have learned lessons and become more cautious in spending. Since then, the overall strategy of the mining company is to integrate assets and develop a asset, rather than investment green space projects. As 2021 commodity prices have soared, the profitability is improved, this strategy may reverse the direction. However, Fitch expects that the growth of exploration expenditures in the next five years is still limited in the past five years, and it is only focused on high value mines.
Outlook the future, Huixi expects the mining company to increase investment in copper, lithium and nickel projects, because renewable energy, battery and electric automotive industries have risen to these metals.
Fitch said that mining companies and metals may also try to dig value from sustainable trends, as mining companies will face decarburization, reduce environmental impact and increase transparency.
Fitch expects that with the demand of low-carbon metal downstream companies, the pioneers in this regard will enjoy the product premium in the future.
Mining capital expenditures will continue to be aimed at further improved efficiency, because industry leaders will give priority to maintaining competitiveness and better resistance to prices. Fitch pointed out that the acceleration of mining industry integration will expand the gap between top low-cost manufacturers and primary miners, and improve the competitiveness of developed markets relative to underdeveloped markets.
However, due to the application of new digital technology, the improvement of interconnection and the substantial growth of network crime monetization, network risk will become a protruding issue facing mining companies. .
At the same time, the increasingly high resource nationalism will also be the major risks faced by the miners in the next few years. Regulatory spaces are changing, more and more government hopes to have higher returns from the natural resource industry within its jurisdiction.
Fitch expects to develop a green and digital economy, the competition of the corresponding mineral resources is more fierce. In addition, some national political risks in the era have risen, and the government intervention mining development and resource nationalism will come up. This trend will accelerate in 2021.