Last week PwC published its annual review of the world’s Top 40 Miners (by market capitalization) providing invaluable insight into the performance of the global mining industry. At the end of 2015, this group had a combined capitalization of half a trillion US dollars. As we leave behind a very challenging post-Super-Cycle 2015 and progress through a more promising 2016, PwC’s ten-year trending analysis of key financial metrics provides even more insight. The chart conveniently condenses four key metrics, which tell the story of both the Super Cycle and the period immediately thereafer. With only half a trillion dollars of market capitalization today, the Top 40 Miners invested more than a trillion dollars over the last ten years, while the mining industry as a whole invested even more. The Top 40 Miners’ market capitalization peaked twice: once in 2007 at $1.2 billion, before the global financial crisis, and then again at $1.6 billion in 2010, after the crisis and following China’s injection of a fiscal $600 billion stimulus package into the world’s economy. The miners made 60% of their trillion-dollar investment between 2011 and 2015, 44% of it in the two years between 2011 and 2013. In hindsight, investment decisions by the Top 40 Miners were obviously motivated by extraordinary profits in 2010 and 2011 and the support received from capital markets generating high valuations. The two capitalization peaks, the rapid recovery from the 2008 financial crisis and the persistently strong commodity demand convinced miners and investors alike that the Super Cycle was here to stay and for a very long time. In 2012, however, cracks started to appear when commodity prices, one by one, started to decline, and eventually collapse when the commodity market became oversupplied. The Top 40 Miners’ profits in 2015, at $26 billion before impairment charges, were about 40% of those in 2006 and only 18% of those in 2011. In recent years, impairment provisions became necessary when investments in expansions and new mines did not deliver the intended financial performance. Over the last three years alone, combined impairment of the Top 40 Miners is approaching $200 billion and their combined market capitalization has been slashed to 50% of what it was in 2006 and to less than 30% of their 2010 peak. The huge $1 trillion – 10-year investment in Super Cycle opportunities also grew balance sheet liabilities, amounting to $569 billion in 2015 – a 362% increase over the past decade. These overleveraged balance sheets also attracted a series of downgrades by debt rating agencies, which added fuel to the fire by further depressing market values. All in all, it’s a story of a typical mining commodity cycle. This one was a Super Cycle, but the same story applies to normal mining commodity cycles: a shortage of commodities results when demand surges, leading to over-investment tending to produce oversupply, which eventually results in impairments. Value is destroyed, but companies are once again positioned for the next cycle; which invariably begins again after an appropriate period of time. The good news is that the Top 40 miners and the rest of the mining industry, after the recent round of impairment charges, cost reductions and extensive sale of non-core assets, are now in a sound financial and operational position to move forward -- once again ready to take advantage of the next commodity up-cycle. (This article is written by Sandy Chim, CEO of Century Global Commodities Corporation)