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 banks 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
Explorations 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