Livewire has acquired Market Index, the country’s leader in free stock market data.
Find out why.

Poor Resource Sector Investment Returns to Persist

John Robertson

PortfolioDirect

Speaking at the Melbourne Mining Club on Thursday, the South 32 chief executive lamented the mining industry’s “poor track record deploying capital” without offering any insights into how the future might be different. Having already been the chief financial officer of the world’s largest mining company, he seemed to be sheeting home the fault to a higher executive pay grade or, else, dopey directors. Australian national accounts data released on Wednesday reinforced the industry’s questionable use of capital. ABS data show March quarter mining industry profitability falling 85% below its 2011 peak to where it was in 2005. Since then, the Australian industry has invested a staggering $639 billion on which it is receiving no return. The blue line in the chart is an assessment of what the industry’s profitability would be if it was achieving an appropriate return on the capital it has invested. The industry’s current run rate (shown in red) is below target by around $66 billion a year leaving it a dauntingly high hurdle if it is to catch up over a full cycle.


3 topics

John Robertson
John Robertson
PortfolioDirect

John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

Expertise

No areas of expertise

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.