Mining M&A value surges while deal count plunges: S&P

First-quarter mergers and acquisitions (M&A) activity in mining saw combined deal value surge despite a sizeable decrease in the number of transactions, according to S&P Global.

The value of transactions involving metals and mining companies rose 63% to about $26.3 billion (C$36.5 billion) during the January-March period compared with three months earlier, S&P said in its latest M&A trends report.

The dollar value of deals represents the second highest ever for a quarter since S&P began tracking the data in late 2013. Securing long-term supply was a key area of focus for companies, the firm said.

Companies in the mining sector are now seeking immediate scale, which explains the surge in corporate-level deals as opposed to asset acquisitions, S&P noted. In total, there were 30 company acquisitions recorded by S&P during the quarter, nearly double the 16 asset purchases recorded.

The January-March period was the first quarter that the firm included steel deals in its coverage. As such, the $10 billion acquisition of BlueScope Steel — the largest of the quarter — likely overstated the increased value of M&A deals compared to past years.

This was also evident in the number of M&A deals, which at 46 was nearly half of the December quarter totals.

Copper-gold focus

Aside from the steel deal, the second and third largest deals centered on gold and copper respectively, an indication of the strong appetite for the two hottest commodities, S&P said. Several large players, including South Africa’s Gold Fields (JSE, NYSE: GFI) and China’s Zhaojin Mining, have indicated they’re open to deals.

As for individual asset buys, the combined value ($3.35 billion) was well above the quarterly average, buoyed by SSR Mining’s (TSX, Nasdaq: SSRM) $1 billion sale of the Çöpler mine in Turkey, though it was 12% lower than the previous quarter. Compared to the same period last year, the value of asset purchases was 221% higher.