FTSE miners emerge from a hole

The final quarter of 2016 is showing the strongest signs yet that global miners have dug themselves out of a hole.

2017 even looks set to bring the first increases in spending by the FTSE’s biggest miners, Glencore, BHP, Rio Tinto for half a decade.

That and the so-called ‘reflation rally’ stoked by investor hopes that President Donald Trump will trigger a fiscal renaissance, have refuelled an advance of mining shares despite several having gained by triple-digit percentages in 2016. After spending fell by two-thirds from a 2012 peak of $21.5bn, according to S&P Global Market Intelligence, Australia’s Association of Mining and Exploration Companies says drilling on new ground, was up 75% percent in last year’s third quarter from the second quarter alone. The rebound of most metals prices from late-2015 lows is a partial explanation, though brutal cost and debt reductions across the board have arguably been more important. Over the last year or so, such exercises have gone a long way toward reassuring investors that the new cycle has better profit potential.

Earlier this week, Randgold Resources unveiled a 72% surge in cash flow for the fourth quarter, overshooting its target for the year and enabling a 52% hike in the annual dividend.

On Wednesday 8th February, Rio Tinto is expected to report its first rise in quarterly revenues since December 2011, with a 17.1% rise to $19.7bn.

BHP Billiton is forecast to report, on 21st February, its first rise in quarterly revenues since June 2009, with a 29.5% rise to $20.35bn.

Glencore will report on 23rd February, with its revenue decline expected to slow to 6.8%, the softest hit since June 2013.