The final quarter of 2016 is showing the strongest signs yet that global miners have dug themselves out of a hole.
2017 even looks set to bring the first increases in spending by the FTSE’s biggest miners, Glencore, BHP, Rio Tinto for half a decade.
That and the so-called ‘reflation rally’ stoked by investor hopes that President Donald Trump will trigger a fiscal renaissance, have refuelled an advance of mining shares despite triple-digit percentage gains in 2016.
After spending fell by two-thirds from a 2012 peak of $21.5bn, according to S&P Global Market Intelligence, Australia’s Association of Mining and Exploration Companies says drilling on new ground, was up 75% percent in last year’s third quarter from, the second quarter alone.
The rebound of most metals prices from late-2015 lows is a partial explanation, though brutal cost debt reductions across the board have arguably been more important. Over the last year or so, such exercises have gone a long way towards reassuring investors that the new cycle has better profit potential.
Earlier this week, Randgold Resources unveiled a 72% surge in cash flow for the fourth quarter, overshooting its target for the year and enabling a 52% hike in the annual dividend.
On Wednesday 8th February, Rio Tinto is expected to report its first rise in quarterly revenues since December 2011, with a 17.1% rise to $19.7bn.
BHP Billiton is forecast to report its first rise in quarterly revenues since June 2009 on the same day, with a 29.5% rise to $20.35bn.
Glencore will report on 23rd February, with its revenues decline expected to slow to 6.8%, the softest hit since June 2013.