Stalled progress in working capital performance in 2011–13 Our analysis of the mining sector’s WC performance shows overall progress stalling between 2011 and 2013, in sharp contrast with the improvement seen in the previous four years (2007–11). Change in WC metrics by commodity group, 2007–11 and 2011–13 DSO change (%) DIO change (%) DPO change (%) C2C change (%) 2011–13 2007–11 2011–13 2007–11 2011–13 2007–11 2011–13 2007–11 Aluminium —7 —26 —4 6 19 —2 —23 —9 Coal 21 —12 17 —7 24 6 11 —28 Copper 18 —8 2 —5 29 —6 —4 —6 Gold —11 —27 26 11 22 —13 16 15 Iron ore —10 —27 12 —14 2 19 1 —47 Nickel —24 —14 26 —3 5 —5 14 —6 Platinum —13 —36 60 18 —3 19 88 —2 Potash —4 —18 13 4 —15 —5 16 —10 Silver 11 —39 31 —20 80 —20 10 —30 Zinc —35 32 —9 —12 5 36 —35 —9 Grand total 1 —21 11 —6 14 5 2 —24 Note: DSO is days sales outstanding; DIO is days inventory outstanding using the current portion of inventory; DPO is days payable outstanding; C2C is cash-to-cash, with metrics calculated on a sales-weighted basis. Kgmj[]2=QYfYdqkak$ZYk]\gfhmZda[dqYnYadYZd]ÕfYf[aYdklYl]e]flk& The mining sector as a whole reported a drop of 24% in C2C It is worth noting that using cost of sales (COS) rather than sales between 2007 and 2011 (from 50 days to 38 days), and then to measure change in DIO and DPO would have shown similar a slight increase of 2% between 2011 and 2013 (to 39 days). variations between 2007 and 2011. The picture would have been It should be noted that two periods of the mining cycle have different for the 2011–13 period, with both DIO and DPO falling been distinguished to allow more meaningful comparisons of the at a much lower rate (instead of both rising). However, a degree of sector’s WC performance relative to conditions in the sector. caution should be exercised when reviewing these metrics. COS is The improved WC performance during the 2007–11 period fglYdoYqk\ak[dgk]\Yf\ÕfYf[aYdj]hgjlaf_Yf\\ak[dgkmj]knYjq came from each WC component, with a fall in both days sales greatly among companies. outstanding (DSO) (down 21%, or 7 days, to 28 days) and days Between 2007 and 2011, every commodity group but gold (and inventory outstanding (DIO) (down 6%, or 3 days, to 44 days), as 55% of companies analyzed) reported a reduction in C2C. Iron ore well as an increase in days payable outstanding (DPO) (up 5%, or and coal were the best-performing commodities. 2 days, to 34 days). The inventory and payables differential Between 2011 and 2013, only three commodity groups (and (DIO – DPO) was reduced from 15 days to 10 days. 42% of companies analyzed) reported a lower C2C. Aluminium For the 2011–13 period, the deterioration in WC performance and zinc were the best-performing commodities, while platinum came from a poor showing in inventory (DIO up 11%, or 5 days, to was the worst, with performance affected by inventory build-up in 49 days) and, to a lesser extent, in DSO (up 1% to 28 days), partly anticipation of strike action in South Africa. offset by better results in payables (DPO up 14%, or 4 days, to 38 days). Cash in the ground: working capital management in the mining sector 4