Global mining deals picking up, but far from returning to boom times
Upbeat news for the mining industry keep piling up, with most major research groups including PwC and E&Y, predicting a significant increase in mining deals this year. The latest one to come up with optimistic data on the matter is Business Monitor, which also warns austerity will remain a key priority for mining firms.
In its article examining trends in global mining M&A activity, the experts say they expect mining mergers and acquisitions to pick up over the coming quarters, driven mainly by low valuations of resource firms, the push for operational efficiency in the sector and the chase for overseas assets by Chinese investors.
While the surge in deals will no be comparable to boom times levels, (M&A) activity in the mining sector should continue to gather pace in the second half of the year.
Since March there have already been four hostile bids, with a total value of $4.5 billion, which contrasts with the mere $594 million as total in 2013. Goldcorp’s $3.3bn failed takeover bid for Osisko Mining was the largest unsolicited offer for a mining firm following First Quantum Minerals’ $4.7bn purchase of Inmet Mining in 2013.
The analysts expect several mining firms to remain reluctant to divest their assets at current depressed prices, choosing instead to hunker down until a cyclical recovery takes hold.