Shareholders in the world's biggest mining firms missed out on the fruits of the resources boom even as the companies they were supporting notched up massive profits.
While the world's top 40 miners attempted to address poor shareholder returns by continuing to pay dividends as commodity prices retreated in 2014 and 2015, it was too little too late, a new report by global accounting firm PricewaterhouseCoopers has found.
"Shareholders were not fully rewarded for the high commodity prices and huge profits experienced in the boom, as management ploughed cash and profits into bigger and more marginal assets," PwC's Mine 2016 report said.
"During those times, production was the main game and shareholders were rewarded through soaring stock prices. However, this investment proposition relied on prices remaining high."
Many top 40 companies were forced to cut capital expenditure and sold assets as management became aware of shareholder discontent with poor investment decisions in the past.
Australia's mining giants BHP Billiton and Rio Tinto scrapped their progressive dividend policies this year after a prolonged downturn in the commodities sector that damaged balance sheets.
PwC predicts dividends will remain a luxury as companies pay down debt and strengthen balance sheets following big losses.
It also found the market capitalisation for the top 40 global mining companies fell 37 per cent to $494 billion by the end of 2015, its lowest since 2004.
"All gains made during the commodity super-cycle were effectively wiped out," PwC said.
The collapse was all the more painful for producers in 2015 because the destruction of value was perceived as self-inflicted.
The world's biggest mining companies are now worth around a third of their value compared to five years ago, with just nine of the top 40 companies showing an increase in market capitalisation.
The big mining houses recorded a total of $53 billion of writedowns in 2015.
During the mining boom, resources companies undertook expansion strategies that included unrestrained capital spending and high-priced mergers and acquisitions which exposed many companies to significant write-downs when commodity prices fell.
Between 2010 and 2015, the top 40 companies impaired the equivalent of 32 per cent of all of the capital expenditure they incurred.
PwC said global miners Glencore, Vale, Freeport and Anglo-American were the hardest hit, with impairments totalling nearly $36 billion.
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