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The global mining industry’s appetite for deal-making has returned after a record year for mergers gave way to a relatively quiet few months.
Glencore International PLC’s $41-billion (U.S.) offer last month to buy out Xstrata PLC has catapulted the value of transactions announced this year to almost a quarter of last year’s $184-billion. While such giant deals are rare, they can trigger moves by competitors.
Mergers and acquisitions will be a major focus as mining companies descend on Toronto this week for the Prospectors and Developers Association of Canada annual conference – a key event for the industry as it faces severe headwinds. Metals producers are desperate to combat rising costs so they can capitalize on the soaring prices of gold, silver and copper.
“What we’ve seen in the last month is a very distinct pickup in activity,” said Andre Hidi, head of mergers and acquisitions at BMO Nesbitt Burns. While Canadian transactions tend to concentrate among small to mid-sized companies, “even the large companies are always looking to upgrade their portfolios,” he said.
Several potential bidders are interested in operations of Ivanhoe Mines Ltd. (IVN-T18.09—-%), the Vancouver-based producer of copper, gold and coal said in a statement last week. Kinross Gold Corp. (K-T10.78—-%) and Goldcorp Inc. (G-T48.57—-%), Canada’s No. 2 and No. 3 gold producers, said they are keeping an eye out for potential deals.
“There will always be a level of M&A,” Charles Jeannes, Goldcorp president and chief executive officer, told the annual BMO Metals & Mining Conference in Hollywood, Fla. “We’ve been very active over the years in acquiring individual projects, because we’re mining non-renewable resources. We will always keep our eye out for good opportunities.”
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