AUSTRALIA'S mining companies have reason to be optimistic despite a difficult past 12 months during which profits fell and their share price suffered a big hit due to lower commodity prices and a slowing Chinese economy, a report says.
The Aussie Mine 2012 Staying the Course report from financial services company PwC found the so-called mid-tier miners made a combined net profit of $1.6 billion in 2011/12, down by 44 per cent from the previous year.
The report, in its sixth year, focused on the largest 50 mining companies listed on the Australian Securities Exchange with a market capitalisation of less than $5 billion at June 30, 2012.
PwC partner Wayne Huf and global mining leader Tim Goldsmith said 2012 had not been an easy time for the mid-tier 50, given the rising concerns about China's economic growth.
Those concerns, coupled with weaker commodities prices, caused the market capitalisation of these mid-tier miners to fall to $51.8 billion at June 2012, down by 31 per cent from the March 2011 post global financial crisis peak of $75.3 billion.
Despite these short-term challenges, the report said the future was bright.
"We are in no doubt that the development and urbanisation of China still has many years to run," the pair said in the foreword of the report.
"This will continue to be the biggest determinant of the prospects of the mid-tier 50."
Atlas Iron CEO Ken Brinsden said China would remain a key buyer of Australian iron ore.
"China still needs to grow and their domestic ore is lower grade and more expensive to produce, therefore they are at a competitive disadvantage," Mr Brinsden said in the report.
"Demand from China for iron ore from external sources will remain."
Meanwhile, Mr Brinsden criticised the federal government mineral resource rent tax.
He said it had impacted on investment, triggered volatility in the performance of mining companies and created a significant administrative cost for companies such as Atlas.
"Our offshore investors are now continually questioning us on what is going on in Australia and what is next," Mr Brinsden said.
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