The ratio of capital expenditure and sales (Capex/Sales) in several large capitalization mining companies falls from year to year, except for Aneka Tambang tbk (ANTM) that spend large capex. The risk faced by the companies with small capex/ sales mining is to be trapped in the a vicious circle.
Capital Expenditure is an activity where the company obtains new physical asset or changes the old asset that creates value in the future. The ratio will describe how the company invests for its future.
The mining sector has been facing difficult times; so most of them are encouraged to minimize their capex to maintain their current operation. Unfortunately, this strategy will only be effective in short term or otherwise they will be trapped on the vicious circle where they could not create a new potential in the future.
The most difficult times was in 2014 that saw the lowest average ratio in years, while 2016 sees many variance among the companies. For example, ANTM spent a quite high capex, especially to construct smelter; and so did Dian Swastatika Sentosa tbk (DSSA), focusing on the expansion of power plant. Medco Energi International tbk (MEDC) also spent a quite high capex after it reduced its asset last year.
Otherwise, the other companies seems to be tightened. Vale Indonesia tbk (INCO) was selling its asset, shown from a negative capex; while Timah Indonesia tbk (TINS) are not spending any capex.
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