Moody's puts miners on review as low prices bite

Jan 22 (Reuters) - Moody's placed dozens of mining firms
around the world on review for a credit downgrade on Friday as
companies battle a slump in commodity prices due to oversupply
and slowing growth in China.
Moody's said it would review the credit ratings of 12 mining
companies in Europe, Middle East and Africa (EMEA) and 11 firms
in the United States to "recalibrate the ratings in the mining
portfolio to align with the fundamental shift in the credit
conditions of the global mining sector."
The ratings agency also placed on review for downgrade 12
mining companies in Canada and four firms in Australia.
A ratings downgrade makes borrowing more expensive for
companies.
The affected companies included Alcoa (N:AA) AA.N , Newmont Mining (N:NEM)
NEM.N , Rio Tinto RIO.L RIO.AX , AngloGold Ashanti ANGJ.J ,
and Gold Fields GFIJ.J .
Moody's said the ratings review would also incorporate
companies that had been placed on review previously, which
include Anglo American AAL.L and BHP Billiton BLT.L BLT.L .
"This broad ratings review will consider each mining
company's asset base, cost structure, likely cash burn and
liquidity, as well as management's strategy for coping with a
prolonged downturn and the ability to execute on same," Moody's
said.
"Moody's believes that this downturn will mark an
unprecedented shift for the mining industry. Whereas previous
downturns have been cyclical, the effect of slowing growth in
China indicates a fundamental change that will heighten credit
risk for mining companies."
Mining companies globally have been hit by plummeting
commodity prices, forcing them to slash jobs, costs, capital
expenditure and dividends.
Commodities trader Glencore's GLEN.L credit rating was
last month downgraded to one notch above junk status by Moody's
which cited likely weak mining market conditions over the next
two years.
Moody's also placed 120 energy firms on review over bleak
oil outlook.