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Valuation of mining industry falls below $1 trillion: report

The market value of the mining industry's listed companies has fallen below $1,000 billion for the first time since April 2009. In its recently publ...

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|Oct 29|magazine9 min read

The market value of the mining industry's listed companies has fallen below $1,000 billion for the first time since April 2009. In its recently published Industry Monitor, SNL Metals & Mining notes that the aggregate market capitalization of 2,684 listed companies tracked in the SNL database at the end of September was only $934 billion, compared with $1,030 billion at the end of August. This represents a 9.3 percent month-on-month decline (there was the same number of listed companies).

The industry's valuation on the world's stock exchanges has fallen over 43 percent since the middle of last year, and is now only 39 percent of the $2,415 billion valuation achieved in April 2011. On this basis, the industry is worth considerably less than Apple Inc. ($650 billion) and Google (Alphabet Inc.; $440 billion). The low point remains November 2008, when the market capitalization of the then 2,390 listed companies was $656 billion.

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The value of the 100 largest listed mining companies is now under $800 billion, having fallen below the $1,000 billion mark at the end of July for the first time since June 2009. These companies’ share of the industry's aggregate valuation was 85.6 percent at the end of last month, compared with a low of 84.3 percent in February 2011 and a high of 93.8 percent in November 2008.

In periods of greatest turmoil the largest 100 mining companies tend to hold their value better than the remainder of the industry, and so account for a greater percentage of the total valuation. This elite group’s share of the total market capitalization has stabilized at 86-87 percent for most of the past three years.

Notwithstanding the continued decline in the value of the industry's listed companies, SNL's Pipeline Activity Index, which measures exploration and development activity, increased in September after a healthy increase in drilling activity and a slight uptick in announcements of initial resources.

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This encouraging picture was offset by a 50 percent drop in the number of financings by companies with annual revenue of less than $500 million. There were only 12 such financings of over $2 million last month, compared with 24 in August and 36 in June. This represented the lowest number of financings by exploration companies since at least January 2012. However, the $171 million raised in September (70 percent by Canadian companies) was 15 percent higher than the month before, although still only a third of the $513 million raised in June.

SNL is a business unit of McGraw Hill Financial, a provider of multi-asset class and real time data, research and analytics to institutional investors, investment and commercial banks, investment advisors and wealth managers, governments, corporations and universities around the world. 

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