COMPANY COMMENT
Mining companies are not investing enough in the future
Investors shy away from falling dividends and declining rates of reinvestment
The latest report from PwC on SA’s mining sector shows why investors are leery about putting their money into the industry. According to the PwC’s SA Mine report, shareholder dividends have fallen to 6% of value distributed by 31 mining companies surveyed. While this is a recovery from the 2017 low of just 2%, it’s a far cry from the 11% shareholders received in 2014. The value received by a diminishing number of employees has risen to 47% from 37% in 2014, while direct taxes absorbed 12% from 9% over the same period. Mining companies have in the past three years increased their funds reinvested, rising from 20% of value distribution in 2016 to 29% in 2018. Again this is far from the 33% of 2014 and 36% of 2015. Put simply, mining companies aren’t investing enough in their future as they face increased demands on their cash. Investment decisions have been curtailed by regulatory uncertainty in SA, a two-year debacle under the leadership of Mosebenzi Zwane as mineral resources minist...
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