Decline in EV Market Spurs Rise in Mining M&A Deals

The weakened demand in the EV market has led mining companies, especially those involved in lithium production, to contemplate scaling back or delaying production. Meanwhile, some are turning to mergers and acquisitions (M&As) as a strategic response. Experts highlight the critical need to adhere to ESG regulations to successfully navigate these high-risk deals.

Despite the market share of EVs in total new-vehicle sales rising by approximately 3% year-over-year in 1Q24, overall EV sales fell by 15% compared to 4Q23. Although the sales growth rate is expected to decelerate from an average of 61% between 2020 and 2023, a consistent annual increase of 20% is still projected over the next three years. EV sales are forecasted to surpass 30 million by 2027, up from 13.9 million in 2023.

Amid market volatility, some companies are weighing the decision to expand production, while others are opting for M&As to enhance their market positions. On Datasite, which supports nearly 15,000 new deals annually, global sell-side industrial transactions increased by 14% in 1H24 compared to the same period last year.

However, significant challenges persist, especially as mining M&A deals are considered risky due to intense environmental, social, and political scrutiny surrounding extraction and processing. Mark Williams, Chief Revenue Officer for the Americas, Datasite, recommends leveraging new technologies for accelerating deal closures and ensuring full compliance with ESG and regulatory requirements. “By adopting a proactive and comprehensive approach to ESG, dealmakers can effectively navigate challenges, seize opportunities, and achieve successful M&A outcomes,” he advises.