Down, but not out
The 2012 review
It was far from the most active year for mining mergers and acquisitions (M&A), but 2012 had its share of exciting transactions and trends. The deal-of-the-year was the announced $54 billion blockbuster merger between Switzerland-based Glencore International plc and United Kingdom-based Xstrata plc to form one of the world’s largest diversified miners.
We don’t expect to see mega-mergers in 2013. With a rash of write-downs in 2012 related to significant acquisitions completed in prior years, shareholders are wary, not willing to stomach the risks associated with mega-mergers.
Tim Goldsmith, PwC's Global Mining Leader, stated: “2013 will be all about asset rationalisation and deal activity will be driven mainly by senior miners looking to divest non-core assets and looking to de-risk projects through joint ventures.”
Companies with financial constraints have been forced to get creative when it comes to raising money to fund acquisitions or advance projects. We anticipate the need for creativity to continue well into 2013. Equity investors are still content to sit on the sidelines until a marked improvement in the markets appears. Expect miners to continue to consider the bond market, joint-ventures and streaming agreements to finance their projects.