Financialization

 

Diliara Valeeva

KU Leuven

SASE-2022, Amsterdam

OF THE GLOBAL MINING INDUSTRY

CORPORATE FINANCIALIZATION

* Increasing shareholder value orientation

* Rising financial assets

* Strengthening financial channels of accumulation

PROPERTIES OF MINING FIRMS

* Influential at local and global levels

 

* The 'landed nature'

 

* Cyclical patterns of demand and production

PERSPECTIVES ON FINANCIALIZATION of mining

* Canadian gold mining: shareholder value considerations such as rapid M&As and high payouts (de los Reyes 2017)

* Zambian copper mining: rising institutional ownership (Mudenda et al 2020)⁠

* South African mining: shareholder value orientation, aggressive M&As, gearing of balance sheets, and high payouts (Bowman 2018)

* Australian coal mining: transforming supply and value chains (Parker et al 2018)

* Commodity firms and markets:  diverging financialization patters for financial accumulation and shareholder value (Baines & Hager 2021; Seddon 2020)

QUESTION

What is the extent of corporate financialization within the global mining industry?

Data and approach

* 90 largest mining firms, 24 countries

* Time frame: 2000-2019

* Refinitif Eikon dataset

 

 

 

 

 

* 3 key indicators of financialization:

1 - Expansion of the balance sheet

2 - Transforming asset structure

3 - Increasing shareholder payouts

Expansion of the balance sheet

cash and short-term investments

* S American and S African firms: Vale (BR), Codelco (CL),

AngloGold Ashanti and Impala Platinum (ZA)

* Asian firms:  Western Mining, China Nonferrous Metals,

China Molybdenum (CN) and JX (JP)

Expansion of the balance sheet

Total debt

The most indebted firms:

Vale (BR), BHP (AU), and Rio Tinto (GB-AU)

TRANSFORMING ASSET STRUCTURE

INTANGIBLE ASSETS

* Chinese firms: China Molybdenum and Shenzhen Zhongjin Lingnan

* Largest 10% firms

INCREASING SHAREHOLDER PAYOUTS

Total payouts

* Largest firms:  Extensive payouts during the GFC

(BHP, Rio Tinto, Canadian PotashCorp)

* European, American, Asian firms:

     high dividends ~2002 and ~2019

SUMMARY

* Non-linearity of financialization patterns

* Cyclical nature of the industry

* Variation across region and size

 

 

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