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Mining deal values tumble in COVID-ridden Q2

The total value of mining deals fell by 26% or US$5.3 billion in the June quarter to $20.6 billion, analysis by GlobalData shows.
Mining deal values tumble in COVID-ridden Q2 Mining deal values tumble in COVID-ridden Q2 Mining deal values tumble in COVID-ridden Q2 Mining deal values tumble in COVID-ridden Q2 Mining deal values tumble in COVID-ridden Q2

Mining deal values tumbled in the COVID-19-ridden June quarter

Staff Reporter

This follows a relatively flat March-quarter reading of mergers and acquisitions, capital raising and asset transactions activities.

"Mining M&A values dropped by 30.5% or $2.9 billion in Q2, while there was a 24.8% or US$3.7 billion drop in the capital raised by mining companies during the second quarter," said senior mining analyst Vinneth Bajaj.

In contrast, however, the number of asset transactions rose by 84.9%, with a $1.3 billion increase in value.

The total volume of deals increased from 860 in the prior period to 1,411, owing to an 84.9% increase in the total number of completed asset transactions. This was accompanied by a 53.4% increase in the volume of completed capital raisings.

Canada, Australia, the USA and the UK accounted for more than 90% of the total deal volume and over half of the total deal value.

The largest of the completed deals involved PT Indonesia Asahan Aluminium's raising of US$2.5 billion by offering three sets of bonds at 4.75% (due in 2025), 5.45% (due in 2030) and 5.8% (due in 2050). Of the total, 60% will be used to pay debts and to acquire 20% of PT Vale Indonesia, while the remaining 40% will be used to refinance the company's older bonds.

Alongside that, Codelco raised $800 million in an offering of bonds due 2031 to refinance debt and enhance the company's good liquidity position and improve its amortisation profile over the medium term. The Chilean copper giant is operating mines with up to 60% workforce and maintaining production levels despite the company's Chuquicamata smelter remaining suspended.

Newcrest also raised $788 million in total, out of which $653 million was used to fund the Fruta del Norte financing facilities, in Ecuador, and the remainder to fund developments at its Red Chris operations in Canada, and the Haverion project in Western Australia.

Eight of the top ten asset transactions deals involved gold, said Bajaj. Topping the list was Mudrick Capital Acquisition Corporation, which acquired a stake and assets from Hycroft Mining for a consideration of $537 million to form Hycroft Mining Holding Corporation.