The world’s top 40 miners incurred a record collective loss of $27-billion in 2015, with market capitalisation down 37%, effectively wiping out all the gains made during the commodity supercycle.

Advisory firm PwC pointed out in its yearly mine report, titled ‘Mine 2016: Slower, lower, weaker . . . but not defeated’ and released earlier this month, that the end of the boom in China, along with the subsequent crash in commodity prices, left miners in a “race to the bottom”.

“Last year was undoubtedly challenging for the mining sector. The top 40 experienced their first-ever collective net loss, their lowest return on capital invested, a significant drop in market capitalisation and an overall decline in liquidity, leaving them more vulnerable and carrying heavier debt loads than in prior years,” said PwC Africa mining leader Michal Kotzé.

The report also highlighted that shareholders persisted with a short-term focus, which impacted on the capital available for investment and constrained options for growth.

Four new entrants in this year’s top 40 were Chinese companies, while AngloGold Ashanti re-emerged in the top 40 for the first time since 2013.

The number of emerging companies included in the top 40 increased by two to 19 and, for the first time, a lithium company made the cut.

“While this must be viewed in the context of the much larger traditional energy sources, there is no doubt that the energy landscape is changing and new world disrupters will have a role to play,” he said.

The financial information for 2015 covered the reporting period from April 1, 2014, to December 31, 2015, with each company’s results included for the 12-month financial reporting period that falls into this timeframe.

The report also found that poor investment and capital management decisions irritated investors, while concern over the ‘spot mentality’ of shareholders focused on fluctuating commodities prices and short-term returns, rather than the long-term investment horizon required in mining.

A focus on increasing value by shedding assets, as well as mothballing marginal projects or curtailing capacity by the top 40 miners was also noted, which was further evidenced by a significant drop in capital expenditure (capex), signalling an almost stagnant investment environment.

A positive focus on cost reduction resulted in a 17% drop in operating costs against a backdrop of higher production volumes and lower input costs.

With a further $53-billion in impairments in 2015, the report showed that miners had now collectively wiped out the equivalent of 32% of their actual capital expenditure since 2010, a stark reminder of the value that has already been lost.

“While it is unfair to focus on the charges incurred this year as price assumptions were adjusted down, a longer-term perspective indicates a lack of capital discipline,” said PwC assurance partner Andries Rossouw.

He added that, from 2010 to 2015, the top 40 had impaired the equivalent of 32% of their capex incurred.

While China was still critical to the success of the mining industry, accounting for about 40% of overall commodity demand, it could no longer be relied on to supercharge returns.

As China moved from a manufacturing-based economy to a services-based economy, the report showed, the previously rampant demand for commodities would not resume with the same intensity experienced in recent years.

Despite this shift, the number of Chinese mining companies in the top 40 increased from 9 to 12.