Mining M&A triples in Australia

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

The value of mergers and acquisitions (M&A) in Australia during the first three quarters of 2017 is close to doubling what was recorded throughout last year.

Australian mining M&A transactions were worth $US4.8 billion ($6.15 billion) in the first three quarters of 2017, according to Mergermarket, triple the $US1.6 billion recorded over the same period of 2016 and almost double the whole of last year ($US2.5 billion).

The number of M&A deals over the first nine months of the year has also risen, from 25 in 2016 to 31 in 2017.

Yancoal’s $US2.45 billion acquisition of Rio Tinto’s Hunter Valley thermal coal division – Coal & Allied – has been the biggest deal of the year so far.

Mergermarket financial researcher Adam Orlando said Australia’s mining sector was expected to continue its rebound in the fourth quarter of 2017.

“With the expected upswing in prices for tech-metals commodities such as nickel, as well as the growing lithium market, signs of renewed growth are showing,” Orlando said.

“In addition the rebounding coal price and the approval of Adani’s massive Carmichael mine are further signs of this activity. Though activity has picked up, deal values across the board have dropped.”

Meanwhile, the value of Australian energy M&A has risen in the first three quarters to $US17.9 billion, more than seven times higher than at the same time last year ($US2.5 billion) and already higher than the 2016 full year result ($US15.3 billion).

Orlando said the energy sector was also showing signs of a recovery and this was not expected to change in the fourth quarter.

“After years of weak demand and low prices, companies are now feeling confident to make strategic decisions and this should lead to further investment in fourth quarter 2017 and beyond,” Orlando said.

There have been 23 energy deals in the first three quarters of 2017, the same number as the whole of 2016.

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