Mining M&A tipped to rise in 2018

Yancoal acquisition of Coal & Allied was a major deal in 2017

Australia’s mid-tier mining sector will potentially see an increase in mergers and acquisitions (M&A) activity in 2018, according to Mergermarket Intelligence.

The consultancy believes that mining may see an uptick in inbound activity as cashed-up international majors enjoy a period of high commodity prices and a projected lower Australian dollar.

“Overseas companies, particularly from countries such as China, are again expected to return to the mining sector after several years of stagnant activity,” Mergermarket reported.

“Improvements in processes at Australia’s Foreign Investment Review Board (FIRB), among other reasons, will allow for more strategic acquisitions.”

Energy, mining and utilities (EMU) overtook transportation as the most targeted sector by value ($37.1 billion) in 2017 with 77 deals.

This result was a 56.7 per cent increase in value compared with the previous year when $23.7 billion was recorded over 59 deals.

EMU’s inbound M&A jumped almost five times to $22.1 billion across 29 deals, taking up 27.4 per cent of Australia’s total inbound value.

The top deal in the sector was a Cheung Kong Property-led consortium’s acquisition of Duet Group, which had a value of $13.1 billion. This deal, along with two other transactions in the EMU sector, comprised three of the top five deals in 2017, Mergermarket reported.

The consultancy believes that Australia, and in particular Western Australia, is poised to lead the charge for deals in the tech metals sector, as federal and state governments open doors to capitalise on growing global demand.

“Electric vehicles, stricter environmental emissions legislation, and household-use solar power batteries are driving demand for commodities such as lithium, cobalt, boron, vanadium, copper, and nickel, all of which are abound in mineral-rich Australia,” Mergermarket explained.

“Western Australia in particular is again expected to be the engine room of such mining deals, as well as IPOs.”

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