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May 8, 2014

Deals in global mining and metals sector drop by 31% in Q1 2014, E&Y survey

The number of mining mergers and acquisitions (M&A) has dropped by 31% to 135 deals with a 67% decline in their value to $6.7bn, during the first quarter of this year, according to a report by Ernst & Young (E&Y).

By Rohit

The number of mining mergers and acquisitions (M&A) has dropped by 31% to 135 deals with a 67% decline in their value to $6.7bn, during the first quarter of this year, according to a report by Ernst & Young (E&Y).

E&Y global mining and metals transaction leader Lee Downham said: "The Q1 completed deal numbers don’t really reflect what we are seeing in the market as the rate of announced and yet-to-be-announced deals has increased."

"There remains a backdrop of caution, however, the mood is much more positive."

"We are beginning to see that translate into confidence to do deals, as reflected by the large pipeline of announced acquisitions, particularly in the gold sector."

"There remains a backdrop of caution, however, the mood is much more positive."

The Capital Confidence Barometer mining and metals sector report stated that, despite a muted start to the year, mining and metals firms show more interest in M&A deals globally in the next 12 months, based on survey of more than 1,600 executives, including 128 in the mining and metals sector.

Nearly 60% of the mining and metals sector respondents expect the deal volumes to improve during the period with around 53% of the companies surveyed having a pipeline of two to three deals.

The gradual increase in deal volumes will be driven by larger miners streamlining their asset portfolio, financial buyers and consolidation among small and mid-tier mining companies, the report added.

Private capital funds estimated to be a minimum of $10bn and as high as $20bn are expected to play a key role in that growth.

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