DIGITAL MINING
mining organisations made a smart move to keep their non-performing plants idle as operating them would have caused deterioration of their financial performance .
Cash and Debt Analysis 2015 and 2016 were terrible years for metals and fertiliser miners , affecting their profitability due to the market ' s volatility . Nonetheless , from 2017-2019 , they could recover , having a steady operating profit and margin . Then again , in 2020 , the pandemic caused revenue decline .
While the mining organisations could keep a steady operating profit and margin , it ' s also important to consider their cash balance and total debt . With an excessive debt burden , it is difficult to survive in the market .
In 2015 , total debts were US $ 224bn with a cash balance of US $ 46bn , generating a net debt of US $ 178bn . From 2016-2018 , the balance sheet was different , with a larger cash balance against a smaller debt load . This pattern was witnessed even during the pandemic in 2020 as mining organisations safeguarded their balance sheets by reducing their spendings .
Cash balance and debt load are related to reliability . A poor balance sheet can be risky for any business , not just mining . However , reliability budget cuts are often the top priority for cost mitigation . If mining plants and related facilities are not functional , then the reliability burden will also decrease . Moreover , it is to be noted that such reliability cost reductions are not for nonperforming facilities . It , of course , creates reliability challenges .
While the mining organisations recovered from the commodity price crash from 2016- 2019 , during the outbreak of the Covid-19 pandemic in 2020 , they protected their balance sheets .
Capital Investment The increased debt in 2015 affected capital investments too . The cash balance increased from US $ 46bn in 2015 to US $ 60bn in 2019 . In 2020 , it went to a whopping US $ 82bn . As miners were recovering from the price crash from 2016-2018 , a huge reduction in capital expenditures was also witnessed .
44 September 2021