(Bloomberg) — Mining mergers and acquisitions are set to bounce after declining to the lowest in a decade last year as companies shied away from large deals and private-equity funds were slow to complete transactions, Ernst & Young LLP said.
The value of mining mergers and acquisitions fell 49 percent to $44.6 billion, the lowest since 2004, E&Y said in a report today. The number of deals declined 23 percent to 544. That excludes Glencore Plc’s takeover of Xstrata Plc in 2013.
“We expect an uptick in 2015; we expect to see more deals from private capital,” Lee Downham, global mining transaction chief at E&Y in London, said in a phone interview. “But I don’t think there will be $10 billion plus or $20 billion plus type of deals happening. It will still be a gradual entry into the market.”
Former bankers and executives including Mick Davis, a past Xstrata chief executive officer, Barrick Gold Corp.’s ex-CEO Aaron Regent and former JPMorgan Chase & Co. banker Lloyd Pengilly have set up companies and funds to bid for assets put up for sale by the world’s biggest mining companies.
Pengilly’s QKR Corp. completed its first deal last year, acquiring the Navachab mine in Namibia from AngloGold Ashanti Ltd. for $110 million in July. It’s also considering a bid of about $1 billion for Canada’s Nevsun Resources Ltd., people with knowledge of the situation said in November.
Cutting Assets
Mining companies have been cutting investment and divesting peripheral assets to allow them to keep up payments to shareholders amid a rout in commodity prices.
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