In an incredible example of shareholder wealth destruction, the world’s top 40 miners have taken impairments on their assets of US$197 billion in the past five years. Combined, the 40 miners reported a US$27 billion loss – the first time in 13 years.

So much for a resources boom.

Miners impairment June 2016

Source: PwC

Shareholders also saw the top 40 miners’ market capitalisation sink by 37% in 2015 – a drop disproportionately greater than that in commodity prices according to the latest annual PWC mining report looking back at 2015.

However, the accounting firm does raise an interesting point. While the value of those assets have been written down, some to nil value, the main assets of a miner, the reserves and resources are generally not included on the balance sheet. But it does raise the prospect of what happens if and when commodity prices rise, since accounting rules prohibit miners from increasing the value of their assets (only impairing or lowering them).

PwC also highlighted that the miners are also much weaker now, with substantial levels of debt and leverage at an all-time high. Across the Top 40, net debt to EBITDA ratio has zoomed from 1.5x to 2.5x and 12 companies have a ratio above 4x.

Returns on capital employed have also plunged from above 20% to below 5% and likely below the cost of capital (although interest rates are at all-time lows).

Miner ROCE June 2016

Source: PwC

The accounting firm are absolutely correct when they stated that shareholders were not fully rewarded for the high commodity prices and huge profits experienced in the boom – with management ploughing tonnes of cash back into bigger and more marginal assets and projects.

BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO) have retained their Number 1 and 2 rankings from last year (based on market cap), despite losing 40% and 23% off their share prices respectively in 2015. BHP is more widely diversified than Rio and was exposed to huge falls in two of its core commodities – being iron ore and oil. The Top 10 miners are listed in the table below.

Miners Top 10 June 2016

Source: PwC

Gold miner Newcrest Mining Limited (ASX: NCM) and iron ore miner Fortescue Metals Group Limited (ASX: FMG) managed to maintain their places in the top 40 (although Fortescue was ranked number 40) as the only other ASX-listed miners.

Foolish takeaway

PwC reported that “it appears that management is aware of shareholder discontent with poor investment decisions in the past”.

Perhaps, but will it stop them from making the same mistakes down the track when commodities price zoom higher again? I’m guessing perhaps not.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.