Australia’s BHP has retained the title of the world’s most valuable mining, iron & steel brand, despite recording a 3% drop in brand value to US$5.8 billion.
This is according to the latest report by Brand Finance, the world’s leading independent brand valuation consultancy.
BHP has had a turbulent year, from negotiating a US$5 billion lawsuit, following the devasting Samarco dam disaster in Brazil in 2015, to battling the repercussions of the catastrophic Australian bushfire, which severely damaged its coal output with production falling 13% in the final months of 2019.
This, paired with the brand’s exposure to fluctuating global trade and softening demand in the key Chinese market, has resulted in a fall in brand value.
The future of BHP looks bright, however, as iron ore prices – the brand’s main commodity and source of income – are expected to remain high throughout 2020.
BHP’s newly appointed CEO, Mike Henry, has already been garnering media attention and stakeholder scrutiny following his refusal to withdraw the brand from the Minerals Council of Australia, which has been heavily criticised for its position on climate change.
Despite this, Henry’s tenure could provide the impetus for change needed to rejuvenate the brand, as BHP continues to tackle the challenges faced by all brands across the sector.
David Haigh, CEO of Brand Finance, comments:
“BHP, along with all mining, iron & steel brands, is having to negotiate the increasing intolerance of new mining projects; a strong brand becomes increasingly important in keeping other influential stakeholders, such as regulators, on side to maintain growth and profitability.”
CITIC Pacific Mining strikes gold
There have been minimal notable movements in the top 10 aside from CITIC Pacific Mining which has recorded an impressive 25% brand value growth to US$2.7 billion, simultaneously climbing two places in the ranking to 8th position.
As with all brands across the sector, CITIC Pacific Mining has been exposed to various obstacles, from the slowing Chinese economy to global geopolitical turmoil.
However, the brand has taken successful steps to protect itself from this uncertainty, through consistent plant acquisitions and its focus on developing the fundamentals of the business, ensuring the brand retains a competitive position in the long-term.
Thyssenkrupp falls 18% amid turmoil
In contrast, Germany’s Thyssenkrupp has suffered the biggest loss in brand value in the ranking, falling 18% to US$2.1 billion.
The steel production giant has been tackling a multitude of challenges as the industry struggles with rising costs of carbon permits and cheaper imports cutting prices.
The repercussions of the US-China trade war have also severely damaged sectors the industry relies on, including the automotive and energy sectors.
Thyssenkrupp is facing management chaos and replaced its previous CEO after just 14 months. With four profit warnings issued during this time and several failed restructuring attempts and mergers, the brand dropped out of the DAX last year after more than 30 years of trading.
With the brand currently bidding to sell its highly successful elevator division, Thyssenkrupp is fighting to push profits up to build investor trust, if successful, the brand could see a change in fortunes this coming year, which could, in turn, boost its brand value.
Three new entrants
There are three new entrants in this year’s ranking: Newmont Goldcorp (brand value US$973 million), Barrick Gold (brand value US$651 million) and Fortescue (brand value US$634 million) in 16th, 24th and 25th positions respectively.
Gold mining giants, Newmont Goldcorp and Barrick Gold, have celebrated strong growth as the commodity continues to thrive, with gold prices reaching a multiyear high last year – a common consequence of political uncertainty.
This, combined with strong central bank buying and an impressive recovery in India’s jewellery market, has boosted demand of the commodity to extremely healthy levels.
Rio Tinto overtakes BHP as sector’s strongest
In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, familiarity, loyalty, staff satisfaction, and corporate reputation.
Alongside revenue forecasts, brand strength is a crucial driver of brand value. According to these criteria Rio Tinto (down 1% to US$3.3 billion) is the world’s strongest mining, iron & steel brand with a Brand Strength Index (BSI) score of 71.8 out of 100 and a corresponding AA brand strength rating.
As with the majority of brands in the ranking, Rio Tinto has dropped in brand strength this year as the sector faces increased scrutiny and intolerance in the face of climate change and global heating challenges.
Despite the brand pledging $1 billion over the next five years to reduce its carbon footprint and reach net zero emissions by 2050, Rio Tinto has been unable to avoid the heat from activists and green groups.
How the brand responds to this criticism will no doubt impact the brand’s reputation and stakeholder engagement, and thus its brand strength in the coming year.