|
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$. |
|
|
|
|
| |
