DSO 1.8 ⇑

DIO 3.6 ⇑

DPO 2.6 ⇑

DWC 3.0 ⇑

Increase in average DWC driven by higher inventory loads, although working capital performance was mixed across the sector participants.

The Mining & Resources sector experienced another strong year in 2022, with 90% of our sample reporting higher revenue. Notably, the ten largest operators (contributing 76% of combined revenue) were able to increase revenue by 16%, on average. The growth was driven by rising coal prices, with the spot thermal coal price reaching US$427 in June 2022, more than US$295 higher than its price 12 months earlier. Despite the reported push for green energy, coal continues to be a significant input for global energy generation with recent price movements impacted by the supply constraints associated with the conflict in Ukraine and an increased energy demand during the northern hemisphere winter.

Other commodities were mixed, with gold prices holding steady over the 12 months to June 2022 and the average iron ore price dipping 11% during the same period (linked to the changing economic and political climate in China, which accounts for 75% of global iron ore imports).

Interestingly, only 53% of operators that increased revenue were able to convert this into higher gross margin as inflation, labour and supply chain constraints materially increased costs.

From a working capital perspective, average DWC increased by 3.0 days (to 46.4 days) driven by higher inventory loads. Average DIO increased by 3.6 days to 76.2 days, representing an additional $3.8bn in cash “locked up” in inventory. Whilst the average increased, there was a mix of outcomes at the company level, with 42% of our sample reducing DIO.

Average DSO increased by 1.8 days (to 40.2 days) and average DPO also increased by 2.6 days (to 67.4 days) in 2022. Continuing the trend from recent years, the majority of sampled companies that took longer to collect from their customers (higher DSO) passed this onto their suppliers through slower payments (higher DPO). This was particularly the case for the “majors”, with 75% of the larger operators with higher DSO extending their supplier payment cycle by close to two weeks (on average).

From an international perspective, the average DWC of our sampled companies was c.8 days lower than their Asian and EU counterparts, but two times longer than their US counterparts.

Looking ahead, the ongoing Ukraine conflict, sanctions and resulting European energy crisis, will likely keep coal prices at or near all-time highs in the near term. However, supply constraints and the broader climate change considerations will continue the push for green energy over the medium term.

“…the decrease [in cash provided by operating activities] on the prior year is mainly due to an increase in cash invested in ore stockpiles and gold bullion…”

Bob Vassie, Chair
Ramelius Resources Limited
2022 Annual Financial Report – Directors’ Report 29 August 2022


COVID-19 Impact

Net working capital performance

Cash Impact ($'m)*

*A positive cash impact is a “release” of cash from working capital (improvement). A negative cash impact is additional cash invested or “locked up” in working capital (deterioration).

Mining & Resources - financial year
Days 2021 2022 Change
DSO 38.4 40.2 1.8
DIO 72.6 76.2 3.6
DPO 64.8 67.4 2.6
DWC 43.4 46.4 3.0
Mining & Resources - half year
Days H1 2022 H2 2022 Change
DSO 33.7 36.3 2.6
DIO 67.9 70.9 3.0
DPO 70.0 62.5 (7.5)
DWC 34.2 42.3 8.1
Best & Worst
Days Best Worst Spread
DSO - 115.0 115.0
DIO 1.8 218.8 217.0
DPO 261.9 5.2 (256.7)
DWC (10.8) 128.6 139.4
International Benchmarking
Days Asia EU US
DSO 41.4 58.5 40.6
DIO 71.0 81.0 43.5
DPO 54.6 85.1 92.1
DWC 54.9 54.1 23.6