The number of mining deals worldwide increased in 2014 and this trend is likely to continue this year amid an ongoing commodity price rout that has forced miners to slash capital spending and cut costs, a study released April 8 shows.
According to SNL Metals & Mining’s report, 2014 saw 73 acquisitions that were valued at over US$10 million each, totalling almost $22 billion for the year. The figure, considerably higher than the $12 billion registered in 2013, is nothing to be too excited about, the study hints. The reason? 2014's total was the third lowest in the past ten years, with only 2013 and 2009 (US$14.88 billion) being more disappointing than last year’s.
The increase in total takeovers was due entirely to acquisition of base metals (copper, nickel and zinc) assets. In 2014 there were 29 deals worth US$13.08 billion, up from 24 deals worth US$3.11 billion in 2013. The average acquisition cost was US$451 million in 2014, compared with US$210 million in 2013. The lion’s share of 2014’s deals were related to copper, which accounted for 97% of the total price paid.
There was spending of US$8.48 billion on gold acquisitions in 2014, which was down 3% compared with the previous year. In 2014, the average cost of these deals was US$193 million.
SNL Metals & Mining report notes that over a third of last year’s metals and gold acquisitions were executed by Canada-based companies. The analysts value those deals at over US$9.02 billion, representing 42% of the total.
Closely behind Canada came Australia, with 13 deals valued at a total of US$7.52 billion. China came in third place, with seven deals totalling US$1.32 billion.