Coal mining profits fell by more than 88% during 2012-13, according to a report from the Australian Bureau of Statistics (ABS). This was largely due to the value of sales dropping by 16.9% during the year, according to ABS director of Annual Industry Statistics, Chris Thompson.

“While coal miners reduced expenses by 2.6%, it wasn’t enough to offset the sales decline,” he said. “Metal ore mining profits also declined by 41.4% and their sales fell by 8.9%. Total expenses grew by nearly 10%, mostly in non-wage expenses, which contributed to the fall in profits.”

However, the mining story is not all dire. “Oil and gas extraction profits grew by nearly 40% on the back of sales growth,” said Chris Mr Thompson. “Oil and gas also saw growth in employment and earnings.”

PwC’s latest annual report on the global mining sector also paints a bleak picture. It underlines how tumultuous the past year has been for miners, who have seen their combined market value drop 23% with gold, diversified miners and coal companies hit hardest.

The report indicates that the world’s top 40 mining companies – including Australian giants BHP Billiton, Fortescue Metals, Newcrest Mining and Rio Tinto – have seen profits by plunge by 72% in the last 12 months. However, it also shows the major miners have increased dividends from $15 billion to $42 billion in the last five years. PwC Australia’s Energy, Utilities and Mining leader Jock O’Callaghan warns that mining companies may need to cut dividends if they are to gear up for the investment required to underpin the next growth phase. He said that companies needed to start investing in their future “whether through innovation, increased exploration activity or mergers and acquisitions, and pare back expectations around dividends and capital returns.”

The PwC report also shows that mining costs have continued to increase despite the industry’s efforts to address its change in fortune. “There is no doubt the industry has moved fast to counter its sudden change in fortune: fleets were parked, jobs slashed, development projects deferred,” Jock O’Callaghan said.

“Mining companies should stop focusing squarely on labour reform to address issues of productivity and equipment efficiency,” he said. “There is an expectation in some quarters that labour reforms are the silver bullet, when in fact they are only one piece in the puzzle.”

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