CONSULTING firm PwC believes the bad and the ugly are over and the good is returning to the mining industry. In a report, PwC says the world’s Top 40 miners recovered from a race to the bottom in 2016, with bolstered balance sheets and a return to profitability giving them much-needed space to pause and draw breath.

The annual review of global mining trends, this year titled ‘Mine 2017. Stop. Think. Act.’ analyses 40 of the largest listed mining companies by market capitalisation, covering the financials between April 1, 2015 and December 31, 2016.

A dramatic statistic is the return to profitability in 2016, with the Top 40 raking in aggregate profits of $20 billion in 2016 compared to total losses of $28 billion in 2015. Rising commodity prices resulted in a 45% total rise in market capitalisation to $714 billion, which is approaching the 2014 level.

However, the top miners only saw a marginal increase of 1% in revenues despite a rebound in commodity prices in the second half, namely coal and iron ore. Any new revenues appear to be going towards debt repayment rather than capital expenditures, which are down 41% to a record low of $50 billion. Companies repaid debt to the tune of $93 billion, up from $73 billion a year earlier, with most debt issued to refinance, rather than fund acquisitions or mine development.

Impairment charges, which care a sign of panic in the industry, fell to $19 billion following near-record levels in 2015.

Another important trend highlighted was limited mergers and acquisitions, with the exception of China. PwC said the reason for a lack of asset sales was possibly the rebound in commodities and improving prospects of their owners. The sales that occurred tended to be strategic, with diversified miners, for example, selling minority stakes in non-mining businesses.

Chinese companies funded more acquisitions due to better access to capital. Such companies, including Chinese private equity firms, were able to pick up assets at rock-bottom prices, as the country continues acquiring mines to reduce its import dependency on certain metals.

Notable among Chinese M&As were the deals by China Molybdenum, a new addition to the Top 40. The company bought the niobium and phosphate business from Anglo, as well as Freeport McMoRan’s share of the Tenke copper and cobalt operation.