How Much Cash Are The Global Diversified Miners Returning to Shareholders? $BHP $RIO $AAL $VALE $S32

view this in your browser GMR: Global Diversified Miners And Cash Returns Good morning/good evening, GMR thought we would take a quick look at the global diversifieds, with a focus on returns of cash to shareholders.  This may come as a shock to the Boards of the gold miners, but the idea with mining companies is that they find rocks, dig up the rocks, make money, and return that to the shareholders.  Gold companies get the first bit, it's the last bit they find hard.  For the global diversifieds, for a variety of reasons (past M&A failures, debt reduction to sustainable levels, owning high cash margin operations, and the need not to have to spend big on exploration as mine lives are long) they are able to return large chunks of cash.  Post COVID-19, with hopefully more normalised commodity prices in 2021, GMR expects investor focus to return to dividend yields and cash returns especially in a world of zero interest rates. Global Diversified Miners And Cash Returns The global diversifieds may not have the appeal of the next drill bit intersection adding 20% to the share price, but they are often good at returning cash to shareholders via regular dividends, special dividends and share buybacks.  Each has its own view of the best mix of method of returns with tax rates for the larger shareholders driving the agenda, complicated for some with tax imputation on dividends in Australia. Going by figures from the Cash Flow Statement, so ignoring when dividends are declared (and sometimes paid much later), GMR finds that the seven big global diversified miners have paid US$82B back to shareholders over the three years 2017-2019.  (BHP and S32 on a December year basis, to align). This is a fair bit of money, albeit not helped by those laggards in the group.  A quick review will show that AAL has surprisingly paid out little, only US$4.0B, with VALE not-so-surprisingly low (remember Samarco and Brumadinho) at US$6.0B and TECK as always in last place. Global Diversified Miners Total Three Year Cash Returns 2017-2019 (US$B) Source: Global Mining Research.  Excludes dividends paid to minorities.  Includes repurchases of stock issued to staff.  BHP and S21 on a calendar year end.  TECK in US$. Its easy to spot those who reward shareholders directly via cash, and that is BHP and RIO, although note they are the largest of the diversifieds so should be the highest.  That leads to the point that as well as looking at the cumulative three year payout, the dollar figures should be put into context of miner size. GMR could look at payouts relative to production (we have tables for production for all their operations on a copper equivalent basis), but its arguably better to simply look at yield.  That is, total three year cash payouts to market capitalisation, showing a sort of grossed-up cumulative dividend yield. S32 has often claimed it gives the most back, and relative to its size GMR finds that statement true.  S32 has returned 41.5% of its current market capitalisation in the last three years (ignoring for ease of calculation historical market caps).  Very interestingly, GLEN is second at 35.2% and that reflects the beaten-up share price of a stock very few want to own at present.  RIO and BHP are next, reflecting the high levels of cash that have been returned.  TECK is better than expected at 20.5%, reflecting today's share price not the cash returned, with AAL very poor at 13.7% and the very-troubled VALE at 10.8%. Global Diversified Miners Cash Returns/Market Caps (%) Source: Global Mining Research.  Current market capitalisations used. So there we have it.  The diversified miners do give a lot of money back, with US$82B over a couple of years not to be ignored.  For S32, it may not have Tier 1 assets for the most part, but the Board and senior management should be applauded for being practical in how cash is managed.  Others need to try harder.  For 2020, obviously the payouts will be less (although the iron ore-rich miners should be reasonable) and GMR waits for 2021 for the payments to recommence in earnest. www.globalminingresearch.com .