Global mining deal value declines 74% to $20.6bn in H1: report

8 September 2013 (Last Updated September 8th, 2013 18:30)

The value of global mining deals declined 74% to $20.6bn in the first half of 2013, according to a new report from PricewaterhouseCoopers (PwC).

Coal mine

The value of global mining deals declined 74% to $20.6bn in the first half of 2013, according to a new report from PricewaterhouseCoopers (PwC).

According to PwC's mining deals report, the volume of mergers and acquisitions (M&As) across the mining sector plunged 31% in the six months from January to June 2013, compared to the same period last year.

The decline was mainly attributed to a loss of confidence due to write-downs, market uncertainty, and falling commodity and equity prices.

In the first half of 2013, mining firm Rio Tinto sold an 80% interest in its Northparkes copper mine in Australia.

PwC noted that, unlike in previous years, when deals were mostly dominated by players in countries like Australia and Canada, top M&A activity so far in 2013 came from Russia and Kazakhstan.

Russia accounted for just over a quarter of deals, followed by Kazakhstan at 19%, and the US with 11%.

PwC global and Canadian mining leader John Gravelle said that even with the industry facing a confidence crisis and large mining companies delivering little profitability, limited deals are still getting done.

"Traditional takeovers of entire companies are taking a back seat to joint ventures and spinoffs. Expect more of these non-traditional and creative deals to round out M&A activity during the second half of 2013," Gravelle added.

Gravelle noted that M&As in the mining sector will remain slow for the rest of 2013 and into 2014.

"Deals that do take place in the next six to 12 months will include companies that have enough cash to seize the opportunity and as their peers unload assets that aren't considered a fit in this new cost-conscious environment," Gravelle said.

The report noted that gold and copper accounted for about half of the M&A activity during 2012 and 2013, both in terms of value and volume.


Image: M&As in the mining sector are expected to remain lethargic for the rest of 2013 and into 2014. Photo: Courtesy of FreeDigitalPhotos.net.

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