Newcrest Mining returns to form, announces profit
Newcrest Mining is back in the saddle, announcing Monday it has finally returned to profit. The Australian gold mining giant, who has endured two straight years of multi-billion dollar losses, raked in US$403 million for 2014 compared to the $2.22 billion loss in the previous year.
• Related content: Top 10 Gold Producers Based on 2015 Guidance
The company said stronger cash flow and deep cost cuts at its gold mines across the board enabled it to pay down debt faster than expected. The miner also announced it would begin reporting its earnings in U.S. dollars—a current trend among companies in the mining industry.
"Newcrest remains focused on further strengthening its balance sheet through safely maximizing cash flow from operations and capital discipline," said Chief Executive Stephen Biswas. He said the result was accompanied by a "substantial reduction in our US dollar denominated debt."
According to MarketWatch, Newcrest used much of its spare cash to repay loans, reducing its U.S.-dollar denominated net debt by US$819 million. When its debt is converted to Australian dollars--the currency in which Newcrest reports its balance sheet--the reduction is a slimmer A$174 million to A$3.76 billion, due to that currency's sharp fall.
“Our priority remains reducing our debt as we go forward,” but the board would consider restarting dividends when the balance sheet is in better shape, Chief Executive Sandeep Biswas said.
• Related content: Top 10 Mining Companies to Work For
“We are stepping closer to that,” he said. “I do want to return to paying a dividend, but it has to be at the right time.”
In 2010, Newcrest acquired Lihir at the top of the market for an astonishing $10.5 billion. Two years later, gold prices plummeted and Newcrest was forced to take a $6.5 billion write-down that included a $3 billion hit to Lihir.
Since then, the company has steadily picked itself up, improving on almost every measure while lifting both gold and copper production alongside a reduction in costs.
Newcrest is targeting gold production at 2.4 million ounces to 2.6 million ounces in the 12 months through June 2016.
View the full press release here.
Global iron ore production to recover by 5.1% in 2021
Global iron ore production fell by 3% to 2.2bnt in 2020. Global production is expected to grow at a compound annual growth rate (CAGR) of 3.7% to 2,663.4Mt between 2021 to 2025. The key contributors to this grow will be Brazil (6.2%), South Africa (4.1%), Australia (3.2%) and India (2.9%). Key upcoming projects expected to commence operations include South Flank in Australia (2021), Zulti in South Africa (H2 2021), Serrote Da Laje in Brazil (H2 2021) and Gudai-Darri (2022), according to GlobalData, a leading data and analytics company.
Vinneth Bajaj, Associate Project Manager at GlobalData, comments: “Declines from Brazil and India were major contributors to the reduced output in 2020. Combined production from these two countries fell from a collective 638.2Mt in 2019 to an estimated 591.1Mt in 2020. The reduced output from the iron ore giant, Vale, was the key factor behind Brazil’s reduced output, while delays in the auctioning of mines in Odisha affected India’s output in 2020.
“Miners in Australia were relatively unaffected by COVID-19 due to effective measures adopted by the Australian Government, while a speedy recovery in China led to a significant 10.4% increase in the country’s iron ore output.”
Looking ahead, the global iron ore production is expected to increase by 111.3Mt to 2,302.5Mt in 2021. Rio Tinto is expected to produce up to 340Mt of iron ore, while BHP has released production guidance of 245–255Mt, supported by the start of the Samarco project in December, which is expected to produce between 1–2Mt.The company has retained its guidance for Australian mines at 276–286Mt on a 100% basis, due to scheduled maintenance work at its ore handling plant and tie-in activity at the Area C mine and South-Flank mine.
Bajaj added: “The remaining companies are expected to produce more than 600Mt of iron ore, including FMG, whose production is expected to range between 175–180Mt supported by its Eliwana mine that commenced operations in late December 2020, and Anglo American, which is expecting to produce between 64–67Mt. Vale is expected to resume 40Mt of its production capacity, taking its overall production capacity to 350Mt in 2021, with production guidance of 315-335Mt.”