Global steel price drives value of Deloitte WA Index in 2017
The value of Western Australian-based listed companies has rebounded during the 2017 financial year closing at AU$152.6 billion, a 13.5% increase on 2016.
It has been a period of rebalance following a welcome turnaround for the Index in 2016 when it grew by 1.8%, and after a tumultuous 11.6% drop the year before. The gains were driven by global steel price increases, thanks in large to both Chinese and US Government infrastructure development commitments benefitting the bulk commodity markets.
Releasing a special edition of the Deloitte WA Index at the Diggers & Dealers Mining Forum in Kalgoorlie today, Nicki Ivory, Deloitte National Mining Leader, said despite some periodic turbulence, commodity markets had exhibited strong growth across the board and a decidedly more optimistic outlook from last year.
“This year’s performance more closely represents a rebalance of pricing as markets come to terms with uncertainty and volatility representing a new normal. In particular, those who have been successful in unlocking value and leading from the front have started to see positive market response.”
Commenting on the strong performance of the mining services sector, Ivory added: “In our resources rich state, demand for mining services often acts as a lead-indicator for the overall health of the energy and resources sector. We should be hopeful this signals optimism for increased mining investment and activity over the coming year.
“This year it is encouraging to see a number of our top movers and shakers being service providers to the extractive industries. Strategic consolidations, capability diversification and the continued drive for innovation and technology-led solutions all played a role in advancing the market capitalisation of our highest movers, underpinned by general commodity price recovery.”
Deloitte WA Index High Growth Awards 2017
At Diggers & Dealers, Deloitte will recognise the top three movers in the WA Index top 20, in terms of market capitalisation growth, for the year ended 30 June 2017. They are:
- Monadelphous Group Limited: Increased its market capitalisation by 88% from AU$699m to AU$1,313m
- South32 Limited: Increased its market capitalisation by 71% from AU$8,199m to AU$14,002m
- Fortescue Metals Group Limited: Increased its market capitalisation by 49% from AU$10,898m to AU$16,233m
Deloitte will also recognise the largest three movers of the WA Index top 100, in terms of market capitalisation growth, for the year ended 30 June 2017. They are:
- Tawana Resources NL: Increased its market capitalisation by 1,915% from AU$4m to AU$86m
- Emeco Holdings Limited: Increased its market capitalisation by 1,332% from AU$18m to AU$253m
- Paringa Resources Limited: Increased its market capitalisation by 441% from AU$26m to AU$142m.
The special edition of the Deloitte WA Index reveals coal delivered the strongest result in the 2017 financial year, as government policy and poor weather impacted supply of both coking and thermal coal. Coking coal finished the year 61.1% higher than June 2016 at US$145.00 per tonne, despite volatility in the year and thermal coal finished the year 42.1% higher at US$80.95 per tonne.
Unfortunately, such energy progress did not extend to uranium with prices finishing 25.6% lower than the start of the year at US$20.10/lb. The fall in price follows significant withdrawals from nuclear power generation in America and Europe, despite supply cuts initially increasing the price.
With the general commodity market improving, and the uncertainties of Brexit and the US election behind us, it was no surprise gold and silver retreated during the year. The value of these traditional safe bets during periods of uncertainty was pushed down by a strong US dollar and positive growth results from the US and UK. Bond yields presented a more attractive investment, as political and economic uncertainty subsided.
In this Diggers & Dealers edition of the Deloitte WA Index, a number of emerging themes are highlighted in specialist articles:
- The digital mine: what does it mean for you? Helping mid-tier and junior miners understand how the digital agenda is moving into the domain of the broader mining industry and might transform the core mining processes, the flow of information, and supporting back office processes.
- Jobs, automation and the people agenda: delivering the digital revolution in mining: How the digital revolution will impact work, workers and the workplace in a multitude of ways.
Deloitte at Diggers & Dealers
The Deloitte team will have copies of the Deloitte WA Index 2017 report and specialist articles available at the Deloitte booth (7) at Diggers & Dealers.
Deloitte is also hosting a breakfast event ‘The digital mine: what does it mean for you?’ on Tuesday 8 August in collaboration with the Gold Industry Group and BGC Contracting. Guests will have the opportunity to network and listen to an expert panel discuss the role of digital in the Australian mining sector, particularly for the mid-tier and junior miners.