PwC report on opportunities and risks for Australia’s resource sector.
Australia’s mining industry is traditionally strong, contributing nearly 14 percent to the country’s GDP—twice as much as in Canada, for example, another resource-rich nation. In addition to coal, iron, and gold, critical raw materials are also attracting international interest as the demand for rare earth elements and lithium grows, along with dependence on resource giant China. What is the current state of the industry in Australia, and can the country’s mining companies benefit from the booming demand for critical resources? The annual report from consulting firm PwC provides answers to these questions, which analyzes the current situation of the 50 mid-sized Australian mining companies (MT50). The market capitalization of these companies is significantly smaller than that of international corporations based in Australia, such as BHP or Rio Tinto. The MT50 includes, among others, the gold producer Northern Star Resources Limited, as well as companies specializing in rare earths like Lynas and Iluka Resources.
Significant Gap Between Potential and Number of Investment-Ready Projects
One finding of the PwC report: The MT50 is becoming more gold-focused, with gold companies now contributing nearly half of the operating cash flow. Meanwhile, the critical minerals sector has significantly lost its share of the total MT50 value. While it was 52 percent last year, it is currently only 37 percent.
Despite this setback, the outlook remains positive, as demand will continue to rise due to green technologies. To benefit from this trend, private capital must be mobilized and mining clusters developed. Many projects are too small to attract investments: Less than one-fifth of the current critical minerals projects are considered investment-ready by PwC.
For the full report, click here.
Photo: assistant ua via Canva