Australian Mining Companies: Credit Steadily Improves

The past few years have been volatile for the global mining industry. Yields are declining as existing ore bodies are worked out, which is constraining supply. At the same time, battery-driven demand for “tech metals” is set to accelerate due to the wider global adoption of electric vehicles, solar cells and mobile phones.

The changing dynamics of mining and global trade are likely to require significant investment. A new report published by Credit Benchmark shows that from a credit perspective, Australian mining companies are well-positioned for the new environment.  In an extract from the report, Figure 1 and 2 show the credit risk trends and credit distribution for 17 Australian and 167 international companies in the Gold and General Mining sectors.

Exhibit 1 Gold & General Mining: Australian and International Credit Trends

It is clear that the credit quality of Australian mining companies steadily improved during 2017. Canada and Latin America have also improved, especially in the final quarter of the year.  Europe has been very volatile, while the US is showing a slight recovery after a decline in the first half of the year.

Figure 2 shows the CBC* distribution for Australian mining companies compared with the Rest of the World.

Exhibit 2 Australian and Global Mining: Comparison of Credit Distributions

Based on credit risk, Australian miners are currently the strongest in the sector.

For more detail, download the full report here.


*Credit Benchmark Consensus

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Credit Benchmark brings together internal credit risk views from over 40 leading global financial institutions. The contributions are anonymized, aggregated, and published in the form of consensus ratings and aggregate analytics to provide an independent, real-world perspective of credit risk. Risk and investment professionals at banks, insurance companies, asset managers and other financial firms use the data for insights into the unrated, monitoring and alerting within their portfolios, benchmarking, assessing and analyzing trends, and fulfilling regulatory requirements and capital.