Across the latest three calendar years, ten of the world's biggest miners produced an aggregate USD 195bn in operating cash flows, used USD 115bn of that for capital expenditure, and ended 2009 with USD 83bn in net debt, including cash. These kinds of surveys can now be made, given that the majority of earnings reports for 2009 have been publicised.
Measured on capital expenditure, and the ability to finance it from internal cash flows,
BHP Billiton, the world's biggest diversified resources stock, easily outflanks the rest, having produced USD 51bn in operating cash flows over the past three years, just over a quarter of the total. The mega group also boasts an exceptionally strong balance sheet, relative to practically all parameters, including its market value, and cash generating capabilities.
Next up are
Vale and
Rio Tinto, with USD 68bn in aggregate generated over the past thee years. The three groups combined generated USD 119bn in operating cash flows over the past three years, well over half the total of the ten names selected. The three groups also rank as the world's biggest mining stocks, by value, and as owners of about 75% of the market in seaborne iron ore, demonstrably the world's most profitable mining franchise. Possibly the biggest single event among the three groups was Rio Tinto's USD 38bn cash takeover of Alcan in 2007. Merged with Rio Tinto's aluminium division, the combined aluminium entity lost money in 2009. BHP Billiton, which mounted a takeover bid for Rio Tinto in 2008, must have breathed another sigh of relief.
