Canadian mining merger and acquisition (M&A) activity in 2013 is set to continue the slow pace set in 2012, according to PwC’s latest Mining Deals report to be released this week.
The total value of mining M&A transactions in 2012 was $110 billion. This includes a single deal that accounts for almost half of this total – a $54 billion merger between Glencore and Xstrata. The value of all mining deals in 2011 was $149 billion.
In terms of transaction volume, there was a total of 1,803 deals in 2012, which PwC said was the lowest volume of deals since 2005 and a 30% decrease from 2011’s 2,605 transactions.
PwC said the cautious pace is expected to continue as metal prices stabilize and mining companies anticipate a continuing increase in commodity demand from such countries as China.
“In 2013, expect deal activity to continue at moderate levels, well behind the frenzied pace of 2011,” said John Nyholt, PwC Canadian mining deals leader.
“Miners will have their eyes on opportunities, but will consider risk factors such as rising costs, resource nationalism and potential political ramifications of buying and selling assets.”
The report states that more than half of the top 20 deals were related to gold and copper mine transactions.
“Investors are turning to gold as a hedge against inflation and general economic uncertainty,” said Nyholt.
“Copper is considered a bet on the future health of the global economy as the metal is used in everything from plumbing and power to automobiles.”
