Go ahead and spend — but do it carefully, nervous investors warn miners
Capital expenditure is up for the first time in five years, and deal-making activity is on the rise — but commodity prices are falling and costs are rising
Melbourne — The world’s biggest miners are cranking up spending for the first time in half a decade as well as pursuing more takeovers — and investors are flashing hazard lights as commodities prices slide and as doubts swirl over the outlook. Capital expenditure among the 10 largest metals and mining companies is forecast to advance to about $35bn this year, the first annual rise since 2013, according to data compiled by Bloomberg. At the same time, the value of mergers and acquisitions in the sector has already surged to the highest in six years, spurred by deals including Barrick Gold’s $5.4bn acquisition of Randgold Resources. “You are seeing a sort of a pivot to growth,” said Camille Simeon, a Sydney-based investment manager at Aberdeen Standard Investments, which manages about $730bn in assets including BHP Billiton and Rio Tinto shares. However, companies need to be certain new projects can deliver improved returns, and they should be wary of major deal-making after the indus...
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