Total Value of Mining M&A Declines in 2024

The total value of mergers and acquisitions (M&A) in the mining sector, encompassing proposed, pending, completed, and terminated deals, has decreased by 12.5% to US$74.2 billion in May 2024 compared to the same month in 2023, according to Bloomberg.

In 2024, M&A deals in mining  have seen a drop of 94% compared to 2023, said Todd Sibilla, Commodity Applications Specialist, Bloomberg, in a conference. In 1Q24, GlobalData reported 299 M&A agreements worth US$12.4 billion. The largest transaction was conducted by the Russian company Mangayeza Plus, which acquired Polymetal for US$3.7 billion, reported BNamericas.

In 2023, the largest deal was Newmont's acquisition of Newcrest for US$19.26 billion. "We have had the largest gold merger in history, but what was one of the most important factors in selling the premium: the company's focus on copper. Part of the strategy here is to create this Tier 1 portfolio and divest some of the assets," said John Wilkin, Partner, Blake, Cassels & Graydon, at the time. 

Experts argue that some M&A deals face litigation by the US government. For example, in April, shareholders of US Steel gave their approval for its acquisition by Japanese company Nippon Steel for US$14.9 billion. Nippon Steel had committed to preserving the US Steel name, maintaining its headquarters in Pittsburgh, abstaining from relocating jobs or production abroad, and bolstering capital investment and technology exchange. However, the deal has not moved forward because the US government wants the company to remain domestically owned. "It begs the question: if Nippon Steel is an unacceptable buyer of this company, then who is? It may chill investment or further foreign investment in certain sectors in the US, so hopefully common sense prevails and we get there on this deal," says George Karafotias, Partner, Shearman & Sterling.

Another trend in M&A is the redevelopment of old mines amid rising metal prices and improved technology economics. However, Carolyn McIntosh, Partner, Squire Patton Boggs, highlights the liability concerns associated with this trend: "If you buy a previously mined area, you may be stuck with the responsibility for remediating it. Understanding the scope of potential liability is a critical part of your M&A."