THE prospect of merger and acquisition activity in the world’s mining sector was undimmed by the COVID-19 pandemic, said the Financial Times.
Citing data from Refinitiv, the newspaper said there had been 292 deals worth $11.8bn in the metals and mining industry since March 23 – the date on which Endeavour Mining swooped on SEMAFO, its Canadian counterpart in a deal worth $690m. Other deals have followed including a $2bn bid by Anil Agarwal to take control of Vedanta.
“There are definitely opportunities for M&A and consolidation,” Mark Bristow, CEO of Barrick Gold, the world’s second-largest gold producer, told the Financial Times. “There are a lot of deals that are going to come out of necessity. I have no doubt about that.”
“And there will be opportunities for us. We are certainly quite busy on that front . . . tracking the potential opportunities we have identified in the past,” he said.
According to Spiro Youakim, head of the natural resources team at Lazard, well priced, judicious deals could meaningfully add value, but there had been “a flight to safety.
“In a very uncertain economic environment, investors in this industry tend to prefer large companies with more resilience, more operational and financial wherewithal, more operational flexibility and a reasonably controlled but greater number of assets,” he said.
Rio Tinto had a “watching brief” on M&A, but its CEO, Jean-Sébastien Jacques, told the Financial Times that it was difficult to make decisions while “fundamentals are shifting”.
“Right now, the market is finding it difficult to value companies and the COVID-19 recovery pathway is not clear. Rio Tinto will only transact if an opportunity creates value,” he said.
