Mergers and acquisitions in the mining sector fell by more than half to $77.1bn in 2009 due to the global financial crisis, according to a PricewaterhouseCoopers (PwC) report.
PwC said the biggest mining deals from last year show that although 2009 saw a 16% gain over 2008 with 1,937 successful transactions, it failed to reach the $153.4bn figure of 2008.
PwC global mining leader Tim Goldsmith told Melbourne paper The Age that most mining mergers in 2009 resulted from companies needing to deleverage their balance sheets.
“For many large and junior explorers M&A became a necessity to repay debts or fund capital projects,” Goldsmith said.
“These obligations, combined with a lack of alternate funding options opened the door for cash-rich companies to acquire assets cheaply.”
Australian companies and assets contributed about $15.6bn of the total transactions for 2009, while Chinese investment included $17bn of the total and accounted for almost 40% of the total inbound deal value for Australia.
The acquisition of coal assets, led by China, grew from 16% of the total deal value in 2008 to 27% last year.
Goldsmith concluded that for 2010 China can be expected to seek further opportunities in Australia, particularly in iron ore and coal.