Revenues for the world’s 40 largest mining companies by market capitalization rose four per cent to US$692 billion, according to PwC Canada’s recent Canadian Mine report. These companies entered 2020 on a solid financial foundation with strong balance sheets and improved liquidity. Similar to last year, six Canadian mining companies made the global top 40 list and are managing through the COVID-19 crisis relatively well. In 2019, these six companies reported a net profit margin of 19 per cent, versus nine per cent for the global top 40.
Gold miners dominated Canada’s presence on the list, with four of the Canadian companies focused on that sector. Among the notable moves was Kinross Gold Corp. (No. 40), which returned to the top 40 for the first time in several years after reporting increased revenues, earnings and margins in its 2019 results. Topping the list of Canadian companies was Barrick Gold Corp., which ranked ninth (up from 11th in 2018), while Agnico Eagle Mines Ltd. saw the largest jump, rising to 17th from 24th in 2018. Agnico Eagle benefited from higher gold sales volumes as two new deposits in Nunavut came into commercial production in 2019.
For Canadian miners, mergers and acquisitions continue to offer opportunities to attract capital and help companies emerge stronger from the COVID-19 pandemic. Of five mega deals noted in PwC’s Global Mine 2020 report, four involved Canadian companies, the largest being Newmont Corp.’s acquisition of Goldcorp Inc. and Kirkland Lake Gold Ltd.’s purchase of Detour Gold Corp. Even as mega-deal activity slowed recently, the largest transaction so far in 2020 also involved two Canadian-listed companies: SSR Mining Inc.’s proposed US$2.4-billion merger with Alacer Gold Corp, which will merge two companies with mines in four jurisdictions to create a diversified portfolio.
Canadian miners have shown resilience over the past year, doing more to deal with cybersecurity threats and making environmental, social and governance (ESG) factors a top priority. There is a reputational advantage with key stakeholders, including investors, for whom ESG performance is becoming a leading guidepost for investment decisions.
“The strong performance of Canada’s largest mining companies in 2019 speaks to their continued progress in recent years,” said Kevin Chan, national mining leader, PwC Canada. “While 2020 will be challenging, miners’ resilience during COVID-19 should help them manage through the coming months and position them to make investments needed for long-term success.”