The world's top 40 mining companies - including Australian giants BHP Billiton, Fortescue Metals, Newcrest Mining and Rio Tinto - have seen profits plunge by a staggering 72 per cent in the last 12 months to A$20 billion ($22 billion), the lowest level in a decade.
PwC's latest annual report on the global mining sector underlines how tumultous the past year has been for miners, who have seen their combined market value drop 23 per cent to A$958b as gold, diversified miners and coal companies were hit hardest.
However, the bleak figures haven't stopped the world's big miners from rewarding shareholders, and dividends almost tripled from A$15b to A$42b over the last five years.
But this rise in payouts was accompanied by a 42 per cent increase in net debt.
PwC Australia's Energy, Utilities and Mining leader Jock O'Callaghan has warned that mining companies may need to cut dividends if they are to gear up for the investment required to underpin the next growth spurt.
"At some point, if conditions remain poor, the market will need to be tested and the dividend tap turned off," O'Callaghan said.
"[Companies] need 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".
Another surprising factor was that the costs of mining have continued to go up despite the industry's effort to address its "sudden 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," O'Callaghan said.
But mining companies should stop focusing squarely on labour reform to address issues of productivity and equipment efficiency, O'Callaghan 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".
Emerging markets dominated over traditional mining centres by a narrow margin, with emerging market companies comprising the majority of the top 40 - a trend PwC expects to continue.
It was a highly tumultuous period for the mining companies' senior leadership and nearly half of the top 40's CEOs have departed in the last two years.
Despite the overall plunge in the market value, O'Callaghan expected that there is still demand for more iron ore in the medium to long term.
"I'm not convinced [iron ore] is bottomed out. In the medium to long term there is still the demand for more iron ore".
Tumultuous Times - World's top 40 mining companies at A glance
- 72 per cent decrease in aggregate net profit to A$20b
- 23 per cent reduction in market value to A$958b
- Dividends tripled from A$15b to A$42b in the last 5 years
- Nearly half appointed new CEOs in the last 2 years 42 per cent increase in net debt
- Sydney Morning Herald