Mining deal value and volume down: Ernst Young

Both the volume and the dollar value of mining deals in Canada fell in 2012, according to the results of an Ernst & Young report ...

Mining truck

Both the volume and the dollar value of mining deals in Canada fell in 2012, according to the results of an Ernst & Young report released this morning.

Mergers, acquisitions and capital raising in mining and metals: 2012 trends, 2013 outlook found that the total volume of mining deals in the country decreased by 19% in 2012. Total deal value fell 37%.

“Despite mirroring the global decline in deal value and volume, Canada maintained an 18% share of global mining and metals M&A value and 37% of global volume in 2012,” said Bruce Sprague, national mining and metals leader at Ernst & Young.

“We saw a number of mid-tier and junior executives maintain confidence to pursue acquisitions despite turbulent times.”

Sprague said this confidence is set to continue in 2013.

The survey found an increase in Canadian outbound investments, showing that many companies are pursuing larger cross-border strategic acquisitions with the goal of expanding existing operations.

The downturn in volume and value is part of a global trend, the study found. Global transactions value and volume declined by 36% and 7% from 2011.

The survey’s results show that 2012 had the lowest number of deals since 2008, but Sprague said this trend is changing.

“Over the next year, we expect to see investment increase at a slower pace, with the majority of Canadian companies doing deals looking to scale-up existing operations by acquiring ‘de-risked’ assets,” he said, explaining that Latin American countries including Peru, Chile and Mexico are top destinations for these transactions.

ecrawford@biv.com

@EmmaCrawfordBIV

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