MercoPress. South Atlantic News Agency

Market capitalization of 40 leading miners plunged 62% in 2008

Rocky times still ahead for the big miners, says PWC report.

The world's top 40 mining corporations shed nearly two-thirds of their worth in 2008, according to a new report that highlights the severity of last year's commodity collapse. ”Market capitalization of the top 40 mining companies decreased by 62% compared to the S&P 500, which declined by 38% over the same period,'' the annual report by PricewaterhouseCoopers said.

The world's top-40 miners include the Australian-listed companies BHP Billiton, Rio Tinto, Fortescue Metals Group, Lihir Gold and Newcrest Mining.

The resources boom will ultimately continue but there could be rocky times ahead for the big miners, added the report.

A commodity prices bubble in 2008 led to a ballooning in the value of mining exports to historic highs before crashing, which then hurt the bottom line of many resource companies.

“Most indicators point toward a tough period for the industry as the short-term issues dominate the agenda'', the report said. “Success in the long term will depend on how the mining industry reacts when the going gets tough.''

Last year, the world's biggest miners reported net profits dipping 14%, from 66 billion US dollars to 57 billion. The 40 companies' collective net debt rose 8% to 115 billion over the same period and operating expenses rose 27% to 208 billion. Revenues rose 23% from 284 billion to 349 billion US dollars.

Report co-author Tim Goldsmith said the downturn in 2008 was a result of a conflict between a ”super-cycle of industrialization'' of half the world and the financial crisis.

“It is fair to say the financial crisis won the battle in late 2008. Quite how the war turns out is going to be quite interesting to see,'' Mr Goldsmith said. ”We have never quite seen the same levels of contradictions in a year as we saw in 2008.''

''The effects of falling spot prices will clearly impact top-40 revenues this year and trigger reviews concerning the economic viability of certain projects and stockpile reserves'' added Goldsmith.