Fitch Ratings agency expects that a recent rise in global mining mergers and acquisitions (M&A) activity will stay strong over the coming years due to consolidation and energy transition.
It says that strategic repositioning of commodity portfolios to service new demand patterns required by the energy transition and an increasingly challenging environment for the development of new mining projects will drive ongoing corporate activity among miners. The need for consolidation and reserve replenishment will support transactions in the gold industry.
Miners’ financial profiles will remain resilient in the short to medium term as commodity prices remain above mid-cycle levels, despite significant normalisation in prices year-to-date, which will provide financial flexibility for M&A and present opportunities for further synergies among higher-cost, smaller companies and larger diversified firms.
Deal activity this year is on track to be the highest for a decade, with miners experiencing increased financial flexibility as a result of extraordinarily high profits over 2021-2022.
Changing demand patterns brought about by the energy transition, increasingly lengthy greenfield project construction timelines and limited organic growth options should support deal activity beyond 2023. Miners will be particularly active in future-facing metals such as lithium, nickel and copper, where the market is likely to be in structural deficit beyond 2026.
Theodor Lisovoy, Editor in Chief of the European bureau, Rough&Polished
