Strong metals and mining M&A activity to continue over 2024 — report  

The industry saw a significant rise in M&A activity across metals and mining companies in 2023 driven by the global energy transition, a theme Fitch Solutions expects to continue in 2024.

Fitch expects to see demand for critical minerals surge, with a number of key markets at risk of going into deficit in the long term.

The growing threat of supply deficits is acting as an incentive for miners to increase the share of critical mineral projects in their asset portfolio, Fitch noted in the new report.

Fitch analysts noted a significant uptick in M&A activity within the mining industry starting in 2020 and accelerating throughout 2021-2022.

In 2023, deal activity remained robust, approaching the highest level seen in the last decade in terms of total deal value, Fitch said, adding that the number of deals remained relatively unchanged from 2022, indicating that individual deals were of higher value in 2023 than in 2022.

“In the coming years, we expect mining and metals M&A activity to remain strong, in terms of both value and count, as miners continue seeking new growth opportunities within a challenging environment for the development of new projects,” Fitch said.

Much of the strong M&A activity in 2022-2023 was centered around critical minerals as industry players continue shifting their mining portfolios to bridge the impending supply gap, with copper accounting for 11% of the total deal value in 2023, Fitch noted.

The largest transactions included BHP’s (NYSE: BHP; LSE: BHP; ASX: BHP) acquisition of OZ Minerals in May for US$6.4 billion, which boosted its copper and nickel portfolio; and Rio Tinto’s (NYSE: RIO; LSE: RIO; ASX: RIO) takeover of Turquoise Hill Resources in December 2022, which strengthened its access to copper resources through greater control over the Oyu Tolgoi project in Mongolia.

The US$10.6-billion merger between Livent and Allkem to form a new integrated lithium producer, Arcadium Lithium (NYSE: ALTM; ASX: LTM), reinforces the industry consolidation trend in response to the rising demand for green metals, Fitch noted.

The new company holds the Mt Cattlin mine in Australia and the James Bay project in Canada — both hard rock projects — as well as brine mines in Argentina. Mt Cattlin, previously owned by Allkem, is currently operating at full capacity, having reached production of 131,000 tonnes of spodumene concentrate in fiscal 2023.

Gold sets the bar

Aside from critical minerals, gold remains a top target among industry players, Fitch said.

In 2023, most notable deals in the gold sector were Newmont’s (TSX: NGT; NYSE: NEM; ASX: NEM) acquisition of Newcrest Mining and Pan American Silver (TSX: PAAS; NYSE: PAAS) and Agnico Eagle Mines‘ (TSX: AEM; NYSE: AEM) acquisition of Yamana Gold. Newmont’s acquisition of Newcrest is the biggest gold deal in the industry’s history, with the world’s biggest gold miner projecting annual output at around 8 million oz. of gold and 150,000-160,000 tonnes of copper.