Australian mining companies' gross operating profits hit record high

The gross operating profits report showed what can be achieved via cost cutting measures. 2016 has been a very good year for metals, which as a pack was up almost 30 percent (industrial and precious); some like iron ore increased more than 60 percent and zinc was up 56 percent. However, metal prices are far lower compared to their 2011 high. Back in 2011, the industrial barometer or the red metal copper was trading close to $4.5 per pound, but the copper ended last year at $2.5 per pound. But that didn’t prevent the gross operating profits from reaching record highs for mining companies in Australia benefiting from the cost cutting measures taken up by the corporations.

According to the released report, gross operating profits reached a record high of $28.16 billion in December quarter of 2016, an increase of 38.5 percent from the September quarter, and, 59 percent increase from a year ago. The chart shows the gross operating profits of the mining companies since March 2007. The previous peak was in September quarter of 2011 when the gross operating profits reached $27.26 billion.   

Since last year, mining companies have recovered lots of grounds but they are still at a lower level when historically compared. We expect more gains in stock prices for companies in this sector.