Five mining companies with turnovers of more than $100 million, including three with turnovers of more than $1 billion, are at high risk of financial collapse according to research from SV Partners.
SV Partners August 2017 Commercial Risk Outlook Report draws upon millions of commercially-sourced records and data assets to create and analyse comprehensive risk profiles of more than half a million Australian incorporated businesses.
The report identifies the sectors and geographical location of businesses most at risk of default during the next 12 months.
SV Partners Managing Director Terry van der Velde said the change in outlook reflected an uncertain global climate.
“With the predicted slowdown in China’s construction activity, we will likely see further declines in steel production, adding to existing pressure on Australia’s resource and energy sector.
“If Chinese investment declines as nationally forecasted, our iron ore and coal mines will suffer. As a result Australia’s resources and energy export prices will drop.
“A weak global commodities market and uncertainty around prices is driving risk in the sector.
“Coal and iron ore prices have struggled to recover since the end of the mining boom. The recent administration of mining contractor Delta demonstrates just how challenging it is to operate in the coal mining sector and remain profitable.
“And it appears the downturn is not over yet with 73 Australian mining businesses at high risk of financial failure in the next 12 months.”
Nationally, the report showed across all industries, upward of 13,000 or 2.6 per cent of businesses are at high risk of collapse in the coming year.
Other industries highly at risk include construction, with 2,000 businesses are facing imminent financial trouble, and retail where 1,591 businesses are facing collapse.