S&P questions global miners' transformation into cash machines

Years of cuts to capital expenditure budgets had turned the biggest mining companies globally into cash machines as commodity prices rebounced, Standard&Poor's said.

Yet according to the debt ratings agency, it remained to be seen how sustainable those dynamics would prove as prices decreased.

Their credit trajectories had undergone a complete turnaround, thanks to a combination of debt reduction through asset disposals, lower dividends, equity raising and free cash flow.

On the upside, lower levels of gearing may provide a solid foundation for balance sheets in the next cycle.

Hence, their financial policy was now "a matter of choice rather than defensive necessity".

Nonetheless, "stronger credit metrics as a result of high commodity prices may not be sustained as and when prices move lower over time."

"We may therefore build in some rating headroom, with more demanding ratio guidelines under supportive market conditions to maintain a given rating."