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Mining Mergers, Acquisitions Surge as Focus Shifts to Energy Transition

Critical Minerals Demand Sparks Deal Activity, With Copper at the Forefront

by Adenike Adeodun

The metals and mining sector is witnessing a significant uptick in mergers and acquisitions (M&A) activity, fueled by the global shift towards energy transition. Industry experts predict that this trend will persist, with a keen focus on critical minerals essential for future technologies. Fitch Solutions’ BMI unit anticipates a continued surge in demand for these minerals, highlighting potential long-term supply deficits that are catalyzing strategic shifts in mining portfolios.

Since 2020, the mining industry has experienced accelerated M&A activity, peaking in 2023 with deal values reaching a decade high, although the number of transactions remained steady compared to 2022. This indicates a shift towards more valuable deals, particularly in the critical minerals segment, which accounted for a significant portion of the total deal value last year. Copper, in particular, has emerged as a focal point, representing 11% of the total deal value in 2023.

Noteworthy transactions underscore the industry’s strategic pivot towards securing resources vital for the energy transition. BHP’s acquisition of OZ Minerals for $6.4 billion in May 2023 and Rio Tinto’s takeover of Turquoise Hill Resources, which provided enhanced access to the Oyu Tolgoi copper project in Mongolia, exemplify the strategic realignment towards critical minerals like copper and nickel.

The forecast for the mining and metals M&A landscape remains optimistic, with expectations of sustained high levels of activity both in deal value and volume. This is driven by the industry’s pursuit of growth opportunities amid challenges in developing new projects. According to a report by Mining Weekly, the gold sector, too, is poised for robust M&A activity as companies aim to consolidate market share and mitigate risks in a high-cost, favorable price environment.

Regionally, the Asia-Pacific and North America are set to witness continued strong M&A activity, buoyed by lower risks and abundant reserves. Australia, in particular, is expected to attract significant investment in its green metals sector, thanks to its extensive reserves of critical minerals and supportive government policies.

As the mining industry adapts to the demands of the energy transition, major players are also focusing on divesting coal assets. BHP’s planned divestment of its Queensland metallurgical coal mines and Teck Resources’ anticipated sale of its steelmaking coal business reflect this strategic shift, underscoring the industry’s commitment to aligning with global sustainability goals.

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