THE world’s mining sector was reluctant to enter into high risk transactions in the third quarter of 2018 owing to geopolitical uncertainty, according to advisory firm EY in its latest edition of ‘Mergers, Acquisitions and Capital Raising’. Despite this, deal value in the sector increased 25% quarter-on-quarter to $16.8bn.
It added, however, that Barrick Gold’s $6.5bn merger with Randgold Resources could influence other industry players to seek volume growth through merger and acquisition, especially as markets began to stabilise.
“Geopolitical instability, including ongoing trade turbulence, has compounded the sector’s focus on optionality across existing projects and a reluctance to execute higher risk capital investments,” said Lee Downham, global mining and metals transactions leader for EY.
“But this approach will eventually have to shift more toward an investment-led strategy across the industry, with potential for acquisitive growth,” he said.
