2015 was a race to the bottom with many new records set by the world’s 40 largest mining companies according to the PwC’s global annual Mine report. The report reveals a first ever collective net loss (US$27bn) for the Top 40 miners with market capitalisation falling by 37%, effectively wiping out all the gains made during the commodity super cycle.

“The last year was a challenging one for the global mining sector however there are some positive outliers in the Canadian market,” said Liam Fitzgerald, National Mining Leader, PwC Canada. “Capital markets appear to be steadying – gold and lithium are among the sectors that are seeing stability and modest growth in Canada. We’re also seeing a recalibration in the Canadian market as a result of cost efficiencies as well as less reliance on demand from China to drive recovery.”

“In contrast with weak market performance in 2015, we’re seeing signs of recovery in the first few months of 2016,” said Nochane Rousseau, Quebec Region Mining Leader, PwC Canada. “Greater stability in the base metal market as well as streamlined operating costs are now helping to mitigate some of the volatility in the global market to create a more favourable environment for growth in Canada.”

Globally, concerns over the ‘spot mentality’ from shareholders focused on fluctuating commodities prices and short term returns rather than the long term investment horizon required in mining while a positive focus on cost reduction resulted in a 17% drop in operating costs against a backdrop of higher production volumes and lower input costs.

While China is still critical to the success of the industry, accounting for approximately 40% of overall commodity demand, it can no longer be relied on to supercharge returns.  As the country moves from a manufacturing based economy to a services-based economy the previously rampant demand for commodities will not resume with the same intensity. Despite this shift, the number of Chinese mining companies in the Top 40 continued to increase from nine to twelve.

With a further $53 billion of impairments in 2015, miners have now collectively wiped out the equivalent of 32% of their actual capex since 2010, a stark reminder of the value that has already been lost. This also represents a hefty 77% of this year’s capital expenditure.

While the Top 40 trimmed a slither of their overall debt in 2015, liquidity metrics have begun to trigger alarms. Leverage is at an all-time high and cash used to repay debt was broadly equal to cash from borrowings.  It’s no surprise that the ratings agencies responded with widespread ratings downgrades.

To explore more insights from this year’s report, please visit: www.pwc.com/mining or download PwC’s 365 App in the Apple Store for additional content from the report.

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