PricewaterhouseCoopers reports that revenues for the 40 largest mining companies (with market capitalization of $2.3 billion or more) increased 23% in 2008 to $349 billion. However, operating expenses grew 27% to $208 billion and net profit declined 14% to $57 billion. Capital expenditures increased 38% to $66 billion. The sharp decline in metal prices in the fourth quarter last year resulted in overall declines for the year. In terms of the percentage contributed to the top 40 companies’ revenues in 2008, copper, nickel, platinum and zinc declined, and coal overtook copper to be the largest contributor due to a 4% production increase and an rise in contractual prices. This year, companies are cutting capital and operating spending and managing production to lower costs. Fourteen of the top 40 companies announced the closure of mines, transitions to “care and maintenance” of mines, or production cuts in the first quarter. Additionally, capital spending totaling $13 billion was cancelled or postponed. The report presents one scenario in which an 18% decline in 2009 revenues for the top 40 firms would require the elimination of $41 billion in costs in order to keep gross profit margins at 2008 levels.

Source: PricewaterhouseCoopers