Copper M&A — The Cupboard is Nearly Bare

By 12 November 2018Reports, Sector Report

We review a decade of copper M&A and preview future activity — In this piece we review the past decade’s copper M&A and identify a number of key trends. We also look at the likely acquirers of assets and assess the large-scale copper assets that are likely to be the subject of future interest and those that may become available.

M&A is back on the menu for mining companies — In some ways it never really went away, but rather the motivation is changing from portfolio rationalisation and balance sheet protection to rebuilding project pipelines in order to deliver future growth. The enthusiastic market reception for the merger of Barrick and Randgold seems to be an example of a change in sentiment towards M&A in general, and perhaps signals a change in investor perception for the potential for it to add value.

Diversified and copper companies are once again seeking growth through M&A — After the past few years’ diet of capital discipline, including a heavy reliance on brownfield development and exploration to maximise the potential of existing assets, in conjunction with the seeming trend of increasingly less successful drilling campaigns, many mining companies are once again in a position to consider M&A to provide growth opportunities.

However, the cupboard of available opportunities is nearly bare — We have taken a look at the copper acquisition opportunities, including existing operations and potential development projects. We have focused on the Tier 1 copper development projects, with more than 3Mt of contained copper. It often appears that everyone claims to be looking for a Tier 1 copper asset, but the interesting thing is that there are only a handful of projects out there that tick the boxes of availability and attractiveness. We expect M&A to hot up in these concentrated areas of interest.

Research

Jim Taylor
+44 (0)20 3440 6821
jim.taylor@rfcambrian.com

David Bird
+44 (0)20 3440 6822
david.bird@rfcambrian.com

For access to this report and further information please contact RFC Ambrian directly