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Mining and energy recovery drives growth in SA Business Index

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Rebounding prices and strong production figures from the state’s energy and mining sectors has helped South Australia’s top 100 companies reach a combined value of $66.8 billion in the 2020-21 financial year.

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South Australian Business Index 2021

Published today, InDaily’s South Australian Business Index for 2021 shows the two industries now account for 42 per cent of the top 100’s total value.

This is dominated by oil and gas giant Santos and emerging copper miner Oz Minerals.

And the dominance of Santos at the top of the Index isn’t likely to end any time soon with an imminent merger with Oil Search expected to see its market capitalisation to increase from $14.65 billion at July 1 to about $21 billion.

Oz Minerals grew its revenue by $645 million and almost doubled its market capitalisation to $7.39 billion during the financial year.

The Adelaide-based company reported a $269 million net profit after tax for the six months to June 30, driven by higher copper volumes and stronger prices.

Its strong growth in the past 22 months since production began at its Carrapateena copper-gold mine in the state’s far north has seen it sail past listed investment company Argo to become the state’s second-largest company.

The surge of Oz Minerals is also expected to continue with copper demand predicted to remain strong and the company recently approving a $600 million shaft expansion at its Prominent Hill mine, which is expected to increase copper production by 23 per cent a year and extend the mine’s life until at least 2036.

The combined growth of the 2021 InDaily South Australian Business Index of 27.3 per cent compared to the previous year was higher than the ASX’s all ordinaries index, which added 24.4 per cent in 2020-21.

Despite slipping to No. 3 on the list, Argo Investments returned a financial year profit of $174 million and a full-year dividend of 28 cents per share.

Argo’s share price also grew strongly in FY21, rising 28.6 per cent to end the financial year at $8.93 and a market capitalisation of $6.46 billion.

Since then, markets have continued to climb, with Argo shares recently achieving a new record high of $9.85.

Recovering gas prices helped Beach Energy hang on to fourth place after a challenging coronavirus pandemic while metal detector manufacturer Codan fell one spot to seven despite delivering another record profit of $90.2 million.

The big movers into the top 10 were telecommunications provider Uniti Group and SeaLink Travel Group, which have both also entered the ASX200 this year.

Uniti surged nine places from No.15 to No.6 after acquiring OptiComm and Telstra Velocity assets.

SeaLink, which now generates about 85 per cent of its income from bus contracts, rose three places from No. 12 last year to be inside the top 10 for the first time.

The company, originally known locally for its Kangaroo Island ferry service, achieved revenues beyond the billion-dollar mark for the first time to reach $1.173 billion in 2020-21.

Its $37.8 million net profit after tax was a $51.3 million turnaround on the $13.5 million dollar loss posted by the Adelaide-based company in 2019-20.

More than 60 per cent of the companies on this year’s South Australian Business Index are privately owned with many of those still in family hands.

However, the 39 per cent of listed companies that make up the Index account for the vast majority of market capitalisation and also hold nine spots in the top 10.

Peregrine Corporation, the operator of the state’s network of On the Run service stations, is the only privately owned company in the top 10 at No. 5.

The company is owned by the Shahin family and has more than 3000 employees, leading to it winning the Index’s Standout Large Employer Award.

The emergence of electric cars and other future-facing technologies has driven huge interest in critical minerals and South Australian companies have not missed out.

Core Lithium will this month begin construction of its Finniss lithium mine and processing plant in the Northern Territory after a $116 million capital raise earlier this year, which has helped increase the Adelaide-based company’s market capitalisation at the end of September to more than $600 million.

The company, which jumped 70 places to No. 16 on the list in 2021 was awarded the Rising Star Award, also has a deal to sell the Top End lithium to a key supplier to electric carmaker Tesla.

Fellow  SA miner Renascor is aiming to develop a graphite mine near Arno Bay on Eyre Peninsula and has increased its share price from just $0.01 in January to $0.14 this week, growing its market cap to $264 million.

The growth spurt has led to Renascor debuting at number 37 in the South Australian Business Index in 2021.

The Sivour project, which also includes a downstream processing plant to produce an export ready purified spherical graphite product, was last month granted major project status from the Federal Government.

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