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Mining Mergers and Acquisitions Expected to Slow Down

Mining mergers and acquisitions have had a strong start this year but are expected to now slow down. Global mining deals in the first six months of 2011 were worth $71 billion and encompassed 1,379 mining mergers and acquisitions.

The statistics revealed in a new report by PricewaterhouseCoopers report showed that the average value of the deals had jumped 40% due to the influence of Chinese demand for new resources. The consistent wheeling and dealing has made it the busiest half year in the history of the mining sector. Tim Goldsmith, global mining leader at PwC said that if the second six months continued at the pace of the first six months, it would beat all known records

Since the month of July the deals have been seen to slow down as the European economic crisis and the slow growth of the United States economy both put paid to new deals. As per the PricewaterhouseCoopers report deal values came down by 32% and volumes came down by 19% in July. Then again in the month of August the deal values fell by 25% and the deal volumes came down by 7%.

PricewaterhouseCoopers’ national leader of transaction services, John Nyholt said that for the time being, politics have taken commodity markets hostage. He added that although a drop off in deal-making was expected, it would not cease altogether as China's demand for metals continues to drive long-term fundamentals in the mining M&A market.

The PricewaterhouseCoopers report said that more than 30% of the transactions in the first six months of the year were made up of deals involving metallurgical coal, iron ore and niobium, a specialty metal used to harden steel. In fact coal was a more targeted resource than gold if seen by the aggregate deal value.

Mr Goldsmith said that although a drop off in deal-making was expected, it would not cease altogether as China's demand for metals, supported by other emerging nations, continued to drive long-term fundamentals and is the most critical factor in formulating the commodity market and, therefore, mining M&A expectations.

Joel Scanlon

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Joel Scanlon

Joel emigrated to Australia in 1995 and worked for five years in the mining industry as an exploration geotechnician, using GIS mapping and CAD software. Upon moving to the North Coast of NSW, Australia Joel worked as a graphic designer for a leading consultancy firm. After that, he ran a successful business providing web services to businesses along the eastern seaboard of Australia. During this time, he developed and launched News-Medical.Net. Joel has been working with AZoNetwork since the company was founded in 2000.

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