Mining Giants' Q3 Revealed: Who's Winning the Growth Game?

Here is a comparative analysis of key data from the updates of major mining giants, along with significant business developments:

Revenue and net income missed expectations: The company reported a third-quarter net income of $922 million, nearly six times that of the same period last year. However, the adjusted earnings per share of 81 cents fell short of analysts' forecast of 86 cents. Additionally, the reported revenue of $4.61 billion was below the consensus estimate of $4.67 billion.

Rising costs drag on profits: While gold has been one of the best-performing metals this year, surging over 30% and repeatedly reaching record highs, investors had high expectations for Newmont to capitalize on the soaring gold prices. However, the Q3 results revealed that the company's direct operating costs (CAS) and all-in sustaining costs (AISC) for gold production rose by 18% and 13%, respectively, exerting significant pressure on profits for the quarter. Lihir, Cerro Negro and Akyem were the main drivers of higher costs.

Looking ahead, the company stated during the earnings call, "All-in sustaining costs for the fourth quarter are expected to be approximately US$1,475 an ounce, which represents an 8% reduction compared to the third quarter."

Overall production increased, but weaker Nevada output: The company's total gold production rose by 29.2% to 1.67 million ounces during the reporting period, primarily driven by increased output from the Cerro Negro mine in Argentina. However, Newmont's attributable production at the Nevada Gold Mines decreased by 19.3% to 242,000 ounces compared to the same quarter last year.

Despite analysts anticipating further upside for gold prices due to factors such as the expanding U.S. deficit, increased demand for safe-haven assets ahead of the upcoming election, and the initiation of a global rate-cutting cycle, there remain concerns about Newmont's operational efficiency and cost management. Following Newmont's earnings release this week, RBC Capital lowered its target price for the company's U.S.-listed shares from $54 to $53.

BHP reported that its iron ore production in Western Australia reached 71.6 million tons, marking a 3% year-over-year increase, exceeding analysts' forecasts for the quarter. This impressive output was largely driven by the enhanced production capacity at the South Flank mine and improved port operations efficiency. The South Flank project, following its commissioning, significantly bolstered the company's overall production, reinforcing BHP's position as a leading global iron ore supplier.

Simultaneously, BHP's copper production experienced a 4% increase, thanks to improved ore quality and performance at its flagship Escondida mine in Chile. The average realized copper price in Q1 FY25 significantly climbed by 17% to approximately $4.24 per pound. The company further strengthened its copper growth prospects during the quarter by announcing a proposed 50/50 joint venture in Argentina with Lundin Mining, aimed at advancing what is considered one of the most significant global copper discoveries in recent decades.

CEO Mike Henry shared insights on China's economic stimulus measures:"China has announced a series of monetary easing policies in an effort to support economic growth, and has indicated more significant fiscal stimulus is on the horizon. Upcoming stimulus is likely to focus on relieving local debt, stabilising the property market and bolstering business confidence."

Meanwhile, driven by the implementation of enhanced safety production systems, Rio Tinto's bauxite output increased by 8% year-on-year to 15.1 million tonnes. This growth was notably significant at the Amrun mine, where operations exceeded the nameplate capacity, resulting in higher plant availability and utilization rates.

Nevertheless, the company's mined copper output fell by 1% this quarter, with Kennecott experiencing a significant 44% decrease compared to the third quarter of 2023. This decline was largely due to highwall movement along two major faults, which restricted access to the main ore face on the south wall and necessitated reliance on lower-grade stockpile ore for the concentrator. As a result, copper production is expected to decline by approximately 50 thousand tonnes in 2024. The company wrote that “the highwall movement will continue to restrict ore deliveries from the primary ore face and impact mined copper production in 2025 and 2026.”

Rio Tinto has made strides in advancing its key projects, notably with the Simandou high-grade iron ore project and the Rincon lithium project, both of which are set to commence production by the end of next year and this year, respectively. Furthermore, the company has announced the acquisition of Arcadium Lithium, marking its entry into the lithium sector. This acquisition is poised to enhance Rio Tinto's supply of materials crucial for the energy transition, adding a world-class lithium operation to its portfolio.

The company maintains the guidance for FY25 shipments, C1 cost and capital expenditure remains unchanged.