CHARTS: The coming critical minerals trade war is BRICS short of a load
"While a large number of countries around the world continue to talk about securing raw material supply, China is actually doing something about it."
There’s never a shortage of dealmaking gossip at Toronto’s annual mining show, though past gatherings have brought more speculation than actual transactions. This year feels different.
Newmont Corp.’s $17 billion pursuit of Newcrest Mining Ltd. underscores the gold industry’s appetite for consolidation. Diversified miners including BHP Group Ltd., Glencore Plc and Rio Tinto Group are also signaling renewed interested in takeovers, which makes the Prospectors & Developers Association of Canada gathering fertile ground for deals.
That’s the backdrop for the thousands of mining executives, investors, bankers and government officials converging on the Canadian city over the next week to attend one of the industry’s largest events. Mergers and acquisitions will be top of mind just as project pipelines shrink and companies face increasing pressure to buy growth. Even smaller precious metals explorers and producers are drawing interest.
“There’s some really attractive prices out there right now from a standpoint of putting companies together,” Canadian entrepreneur Rob McEwen, who founded Goldcorp and now leads McEwen Mining Inc., said in an interview ahead of the conference.
Newmont’s proposal to buy Newcrest in early February — the biggest gold mining takeover ever, if it happens — set the tone for M&A this year. That one deal accounts for a lion’s share of the $28 billion in announced mining takeovers tracked by Bloomberg in the first quarter. While the number of deals in the first quarter is down from last year, there’s good reason to think activity could gather steam as executives meet at PDAC starting Sunday.
“The majority of our members are small- to medium- sized companies, and the M&A in that space has not been particularly big recently,” PDAC President Alex Christopher said in an interview. “Clearly a lot of them look to M&A for growth, though. They’re often trying to discover assets that a bigger company would later take on.”
Such is the case with Sabina Gold & Silver Corp., the Vancouver-based explorer that agreed to a C$1.1 billion ($809 million) takeover by B2Gold Corp. last month. Companies are also seeking to bulk up on battery metals amid a global shift from fossil fuels to the copper, nickel and lithium needed to power an energy transition. Teck Resources Ltd. is pivoting in that direction, after the Vancouver-based miner said in February that it’ll spin off its steelmaking coal unit to focus more on copper.
Automakers have even started investing in the producers of raw materials they need, a rare move for an industry that doesn’t typically venture down the supply chain. Stellantis NV just took 14% of McEwen Copper. General Motors Co. is competing for a stake in Vale SA’s base metals unit following its $650 million pact with Lithium Americas Corp. And Tesla Inc. has been weighing a takeover of Sigma Lithium Corp.
Freeport-McMoRan Inc. doesn’t have a strategy of going out and chasing deals, although the copper giant would react if the right one came along, CEO Richard Adkerson said at another industry event on Feb. 27. Consolidation is bound to happen given copper’s bullish longer term outlook and limited organic growth opportunities, he said.
“That will inevitably lead to M&A activity,” he said.
(By James Attwood and Jacob Lorinc)
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