Mining transactions and industry consolidation

High levels of transactions across all segments of the sector involving industry players of all sizes seeking deals all over the world continue to rapidly change the face of the global mining industry. The industry's biggest companies have and will continue to seek opportunities to further distinguish their market leading scale. The global economic slow down has presented emerging economies with the opportunity to acquire assets/companies at reduced prices in order to expand the size/scope of their operations and secure much needed resources to fuel their burgeoning economic engines driving rapid growth. The challenges brought by the global financial crisis require companies to obtain access to new technologies and competencies, streamline their operations and asset portfolios, and consider novel and sometimes radical solutions to address their financing needs.

The demands of the global market have been pushing the mining sector to evolve and the pressing need to explore undeveloped areas, restart stalled operations, and strategically restructure will continue to push companies to consider all available funding sources, form new ventures, invest in consortiums, acquire competitors, and dispose or acquire specific assets. Whether it be the ongoing expansion of the super-majors, the consolidation in the middle and lower tiers, integration of downstream operations in metals or power segments, or the search for resources by emerging economy players, the mining industry is poised to see more and more transaction activity off the back of already unprecedented deal volume in recent years.

Being in a position to anticipate deal opportunities or threats from competitors will be critical for any mining company navigating today's very dynamic global mining market. Responding quickly and appropriately to these deal opportunities, bridging language, legal and cultural gaps, and building the most realistic business case for a transaction decision can be challenging. At the same time, heightened transaction risks arise when there is insufficient time to learn all pertinent facts, a cultural nuance or practice is misinterpreted, or the consequences of a hostile bid are not fully understood.

How PwC can help you

When doing any deal, it is invaluable to have a trusted advisor who can walk in your shoes and collaborate with you throughout the deal process -- one that truly understands the issues relevant to your situation, is experienced in structuring deals, knows how to manage your risk, and has resources on the ground in all locations the deal touches.

At the heart of the PwC global mining network, there is a well connected deal team of transactions specialists and mining industry market experts from key mining territories from around the world. Drawing from deep experience built from years of assisting mining companies on deals of all sizes around the world, our team is best placed to assist our clients with all aspects of the deal value chain from identifying and evaluating investment opportunities, to best in class execution of deals, post-deal advisory to help make deals successful, through to harvesting value from investments. Our global mining team leverages the multi-disciplinary expertise from across the firm and we collaborate with every client to focus on the commercial aspects of the deal and help our clients reach their goals.

On the buy side, we help acquirers to identify potential targets, evaluate assets/companies, improve their M&A process and set post-close priorities. After a deal closes, we counsel a company on key post-deal integration matters including key employee retention and enhancing operations by improving the internal controls governing a target's financial, IT, back office, supply chain and customer management systems and processes.

On the sell side, we help clients identify assets for disposal, resolve carve-out issues, assess the quality of earnings, determine the impact of transition/removal issues, assist in the coordination and structure of the data room, and advise purchase agreements and closing.

For clients who are potential targets, our transaction specialists can prepare reviews on the client's own business in advance of any bid to provide insight into the strategic, operational, and financial vulnerability of the client and identify possible "white knights." This allows a client to maintain a state of readiness and allow for a more effective response if a bid should arise. We can also perform "dummy" assignments for companies that are exposed to a potential take-over bid.