Mining mergers and acquisitions rose by $US25 billion during the first quarter of 2018, up 86 per cent year-over-year (YoY), according to a new report from EY.
According to the report, entitled Optimise for today? Build for tomorrow? Mergers, acquisitions and capital raising in mining and metals – 2018 outlook, this massive jump was due in large part to transformational mergers between potash producers, PotashCorp and Agrium; of the $US25 billion ($33.1 billion) figure, $US18.5 billion ($24.5 billion) was for potash and phosphate deals alone.
Gold took a distant second place at $US2 billion ($2.65 billion), with aluminium and coal not far behind at $US1.9 billion ($2.52 billion) and $US1.7 billion ($2.25 billion), respectively.
Overall, a key theme cited by EY was the global renewables push, citing thermal coal divestments, a large drive for battery materials for electric vehicles. Australia and South American lithium assets were cited in the report as the primary locations for new lithium asset investment.
The value of mining and metals deals in 2017 reached $US51 billion ($67.6 billion), its highest level since 2013, which was the year of the colossal £39 billion ($60 billion at the time) merger between Glencore and Xstrata.
Coal and steel were key drivers of deal value; coal acquisitions were up 156 per cent to $US8.5 billion ($11.3 billion) though volume was down 27 per cent to 30 deals. Steel transactions doubled to $US13.3 billion ($17.6 billion), $US9.3 billion ($12.3 billion) of which was represented by Chinese mergers and divestments in Latin America.
Asset deals were also up massively over 2016 figures, increasing from six deals to 31 deals totalling $US72 million ($95.4 million), of which Australia and North America were the main focus due to their status as low-risk jurisdictions. Australia was also a major player in the IPO sector; it, along with Canada and China, accounted for 60 per cent of follow-on equity volume and proceeds in 2017.
The full report can be read here.