Mining deals surge with China gaining traction in market

Marion Dakers
CHINA is snapping up fast-growing miners in new markets while Western firms “play it safe”, according to figures from PwC out today.

Mining titans in the US, Canada and Australia still make up the lion’s share of the takeover market, representing 53 per cent of buy-side activity by value in 2011.

But firms in developed nations made 72 per cent of their deals with companies in similar markets in 2011, while China made more than half of all purchases in newer “growth markets”, PwC said.

Overall, mining M&A was worth 33 per cent more last year than in 2010, with 2,600 deals worth $149bn (£94bn) taking place, compared to 1,324 global deals worth $104bn the previous year.

This is just two per cent short of the peak seen in 2006, and PwC estimated that miners still have $105bn ready to spend.

The report singled out Africa as the focus for a flurry of M&A activity this year.

“Numbers don’t lie. Developed nations have to ask themselves what is the long-term cost of not doing business in the growth markets. They need to be more aggressive,” said Jason Burkitt, UK mining leader at PwC.

“The shifting centre of gravity, from the west to the east, will increasingly challenge the traditional economics behind mining M&A and force Western entities, especially boards and shareholders, to reconsider the protocol in which the balances of risk and reward are weighed.”