EY report shows four-year high for mining deals in 2017

Global mining and metals deals saw a 15 per cent boost in 2017, according to a report from Ernst & Young (EY), reaching a four-year high for deals overall.

In particular, coal transactions surged 156 per cent to $US8.5 billion ($10.7 billion), while steel deals doubled to $US13.3 billion ($16.8 billion), spurred by Chinese mergers and LatAm divestment.

Silver-lead-zinc saw an amalgamated year-on-year value rise of 32 per cent, up to $US2.7 billion ($3.4 billion). Conversely, gold transactions fell 34 per cent to $US7.3 billion ($9.22 billion) overall.

The report, entitled Optimize for today? Build for tomorrow?: Mergers, acquisitions and capital raising in mining and metals — 2018 outlook, suggests a key industry trend towards cash generation and a greater ease of securing funding and investment, rather than the previous trend of financial resilience following the downturn.

Lee Downham, EY global lead partner, mining & metals transaction advisory services, pointed to a widely recognised and reported trend of rising electric vehicle (EV) production as an area of growth.

Cobalt, lithium and nickel were cited as particularly prevalent for this. More broadly, Downham pointed to asset diversification as a general trend.

“Last year we saw fewer deals but at better values,” he explained. “In 2018, we expect to see more deals supported by investment-led strategies to diversify by commodity or region.

“Some of this activity will be to shape portfolios for future growth and sustain shareholder returns.”

The full report can be read here.