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Mining giants’ massive write-downs reflect global market challenges

So far this reporting season, major miners have revealed more than $US13 billion (nearly $A20 billion) in write-downs and impairments as global markets across 2023, and weak demand send prices and profits lower and upset projections for the rest of this year and 2025.

It’s no secret that nickel is the most troubled business, iron ore the least.

The major write-downs have come by BHP, Glencore, Anglo American, and precious metals producer Sibanye-Stillwater who between them account for more than $US9 billion of the losses.

Of the major mining countries, around US8 billion of the write-downs are directed as assets in this country from all major miners over 2023.

Wednesday saw Sibanye-Stillwater has joined the ranks of major miners writing down the value of underperforming assets.

The company – which bought New Century and its Century mine trailing re-treatment business last year in Australia, warned this week that it will take a $US2.6 billion impairment on its upcoming 2023 results due to falling prices for the main metals it mines, including palladium, platinum, and nickel.

The company said it expects to report in March a loss per share for 2023, compared with a profit of the previous year. This would be an eye-popping 91% drop in annual profit.
The announcement comes only two months after the South African miner announced it would lay off 1,500 workers from its gold mines. It also said at the time it had started talks that could affect 4,000 more employees at its platinum group metals (PGMs) operations, including those in the United States.

“We have already taken proactive steps to address loss-making production at unprofitable operations and the group remains focused on ensuring the sustainability of our business and delivering on our strategical essentials through this period of low commodity prices,” the company told investors mid-week.

The move was followed a day later by Newmont revealing a $US1.3 billion impairment on the value of its troubled Penasquito gold mine in Mexico.

Earlier in the week BHP confirmed a $US2.5 billion write-down of the value of its Nickel West business in WA while Rio Tinto confirmed it had written down the value of its Australian alumina refineries by $US1.22 billion.

IGO took another $170 million off the value of its nickel assets which was after a $968 million impairment last year.

Another South African giant, Anglo American’s has cut its dividend after full-year profit fell more than expected and it booked $US2.1 billion in impairments as it grapples with weak commodity prices and markets.

The multinational, diversified miner said Thursday that its net profit for 2023 dropped 94% to $US283 million on year due to impairments from its diamond and nickel businesses and lower prices for platinum and diamonds.

This significantly missed analysts’ expectations of $US2.44 billion, according to FactSet. It’s also a sign of how damaging the fall in prices over 2023 in some commodities is becoming.

Glencore wrote down the value of its McArthur River zinc and lead mine by $US118 million in its 2023 accounts. That was just one of a series of impairments totaling $US2.48 billion in 2023, down from $US3.3 billion in 2022.

Last week big Canadian gold miner, Agnico Eagle wrote down the value of two of its mines by a post-tax $US667 billion.

And even though Fortescue ducked a write-down in the December half-year, its 2022-23 accounts (which include the first six months of the year) saw a decision to write down the value of its troubled Iron bridge magnetite mine in the Pilbara by $US726 million.

And Mineral Resources reported impairments totaling $A522 million on its iron ore business early in 2023.

BHP also boosted a provision for possible costs for the Samarco Dam failure in early 2015 by $US3.2 billion and partner Vale added $US1.2 billion to its provision in its full-year figures out Friday (Sydney time).

These are not provisions in the same sense of BHP’s impairment of the value of its WA nickel business or Rio’s write down in the value of its local alumina refineries.

But if they are included on the list then the total is nearly $US19 billion or more than $A29 billion.