Mining Industry Drops Below One Trillion Dollars

The value of the mining sector worldwide has dropped below one trillion US dollars for the first time since 2009, according to a new report released today by industry adviser SNL.

Whilst little more than a big round decimal figure, the crossing of the line shows the full extent of bearishness being suffered by mining stocks. In aggregate, they are down by more than 9 per cent in the last month alone and a whopping 43 per cent since the middle of last year, as the sector’s collapse shows little sign of slowing.

At its peak in mid-2011, which marked the highest ever point for commodities, from copper to coal, the sector was worth nearly 2.5 trillion dollars. But now the entire industry is worth less than Apple and Google combined, valued at $650 billion and $440 billion apiece.

Aside from technology stocks, the oil industry also heavily outweighs mining, with ExxonMobil’s $346 billion market cap dwarfing that of its counterpart in mining. BHP Billiton, which spun-off its South African assets earlier this year, remains the mining industry’s biggest player, but its market value has plummeted to $92 billion, having dropped 13 per cent this year.

Even UK banking stocks, including HSBC, Barclays, Lloyds and RBS, which have never fully recovered from their near-death experience in 2008, are beginning to look hefty versus tired old mining stocks. Combined, at the close of trading on Monday, the UK’s five biggest banks carried an equity value of around $400 billion.

Today’s data compiled by SNL meanwhile shows that the mining industry only very loosely complies to the Pareto principle, or the 80:20 rule. The 100 largest mining companies account for 80 per cent of the industry’s total worth, a figure that has remained more or less constant throughout the industry’s tumult.

Exploration activity ticked higher last month, but in a troubling development, which points to a rising number of bankruptcies in the coming months, the number of financings sharply decreased. September registered the lowest number of financings by small mining companies for at least 3 years, according to SNL.