American investment bank Morgan Stanley has found that almost a third of mining investments made by the industry’s largest companies between 2008 and 2017 were eventually written off, translating to $273bn in lost funds over the last decade.

The bank worked with PricewaterhouseCoopers (PwC) to conduct research found that around $939bn was invested over the ten-year period, meaning 29% of the initial capital outlay was lost. This almost equals the $291bn of dividends paid over the period.

“Unfortunately, a substantial portion of the associated cash flows was squandered,” said Morgan Stanley. “The industry has made changes that suggest the capital destruction of the last 15 years should not repeat.”

The bank suggested Australian companies contributed to the high percentage of lost investments, with Rio Tinto’s losses on aluminium and coal projects and BHP’s multi-billion dollar write-off of shale oil assets having significant impacts.

The figures are surprising at a time when dividend ratios are typically much higher, usually between 40%-50%, and companies are unwilling to make significant investments at high risk. An increasing strictness of board remuneration policies and a shift to using return on capital as a core measure of performance has also discouraged overly-optimistic investments, a significant source of investments that ultimately yield little.

Despite the high rate of write-offs, mining companies continue to do well in general. Morgan Stanley and PwC found that from 2000-2017, annual post-tax returns on capital for Rio Tinto and BHP averaged 14%, an increase of 6% from 8% from 1981-1991. BHP’s share price has rebounded from a low of £615 in January 2016 to reach £1,661 by July 2018, while Rio Tinto’s price has consistently improved from a relative low of £1,643 in January 2016 to £1,109 in July 2018, suggesting that both companies’ aggressive investment policies could be yielding positive results.