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Private equity, traders boosting mine M&A

Keywords: Tags  Society for Mining Metallurgy and Exploration, mining finance conference, Carlos Urquiaga, BNP Paribas, mergers, acquisitions, M&A, Andrea Hotte

NEW YORK — Private equity and trading firms are stepping up their merger-and-acquisition activity in the mining sector, which is seeing its traditional investment patterns evolve and change, according to a managing director at BNP Paribas SA.

Carlos Urquiaga, who heads the Paris-based bank’s energy and commodities team in the Americas, said that private equity firms are entering as buyers or joint-venture partners, while the involvement of sovereign wealth and hedge funds is becoming more common.

Meanwhile, trading firms are "opportunistically buying assets to integrate into their value chain," Urquiaga said at the Society for Mining, Metallurgy and Exploration’s mining finance conference in New York.

Senior, large-scale mining companies are divesting nonstrategic assets as part of portfolio management strategies or in order to reallocate capital, he said, but medium-sized miners have undergone consolidation at such a fast pace in recent years, especially in the base metals arena, that there are "very few assets left to consolidate." Junior miners with advanced projects and a lack of resources, however, have grown increasingly willing to bring in joint-venture partners, merge or sell projects.

Urquiaga said it would be wrong to expect projects to be snapped up by resource-hungry nations like China and South Korea, as was the case in the past decade. "These nations have significantly slowed down their resources merger-and-acquisition spree and are focusing instead on their involvement as joint-venture partners to secure offtake," he said.

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