Canada has been the second most active player in terms of global M&A, second only to China in total dealmaking in recent years, according to the latest The Canadian Mining Report.
Published on 22 July 2022, the report titled Canada Remains Mining M&A Heavyweight, looks at Canada’s global mining M&A transaction activity, which the report describes as being “reasonably strong” over H1 2024.
The report shows Canada is second only to China for total M&A value and just behind leader Australia based on M&A value to GDP in recent years.
Canada has been averaging US$11.7 billion ($17.6 billion) per year from 2018-2023 in dealmaking world-wide, with China ahead at US$16.9 billion.
“However, Canada’s GDP, averaging only US$1,906 billion from 2018-2023 is of course far smaller than China’s, at US$16,052 billion. This gives the former a much higher mining M&A/GDP ratio of 0.615% versus the latter at just 0.105%,” the report says.
“This puts Canada almost at the global top for mining M&A/GDP over the past six years, with only Australia marginally higher, at 0.632%.
“Looking back farther to 2006, while a country’s share of global mining M&A by country can change dramatically from year to year, the average gives the same country ranking as the 2018-2023 data.”
China (21%), Canada (16%), the US (13%), and Australia (11%) are the market leaders in percentage terms of global M&A respectively. Russia has been the fifth largest player, however, the report shows its M&A share has plummeted recently to just 3% from 2018-2023 compared to 9% of the share of deals since 2006, the report notes.
Quarterly global mining M&A data indicates a “relatively strong year in 2024 so far”, with H1 2024 at US$34.6 billion – or 47% of last year’s level – putting Canada on track to potentially match that of 2023.
In H1 2024, Canadian M&A was US$3.9 billion – or about 42% of H1 2023 – which The Canadian Mining Report suggests could see it reach 2023’s level with some moderate growth half on half for H2 2024.
According to The Canadian Mining Report, M&A across the resources space has been growing over time with a surge in deal activity over the past three years in particular.
The average mining deal size of US$54 million from 2007 to 2020 had been 38% below the average for all global deals at US$87 million over the period.
However, mining deal size surged ahead of the global average in 2021 to US$140 million –“spiked to US$211 million in 2022, and was still a high US$152 million in 2023, nearly twice the level of the average global M&A deal”.
Still room for further rise in global mining M&A
The Canadian Mining Report adds that the previous low level of global mining valuations combined with an uptrend in metals prices in recent years have increased opportunities for dealmaking with many transactions attractive under these conditions.
Global mining M&A was US$74 billion in 2023 – or 2.3% of total global deals – and averaged US$79 billion over the past three years.
“This is a clear improvement over the lull in mining M&A activity from 2013-2019, with an average US$51 billion per year, and 2017 low of US$40 billion, at 1.2% of the total M&A,” the report explains.
“Canadian M&A mining activity followed a roughly similar trend, with a strong period from 2006 to 2012 and weakness for several years from 2013. However, it started to pickup in 2018, in contrast to 2021 for global mining, and apart from a weak 2020, generally trended up to a peak of US$18.3 billion in 2021.
“While the country’s mining M&A for 2022-2023 declined to an average US$9.7 billion, this was well above the US$6.2 billion average from 2013-2017, but only a third of the peak US$29.2 billion in 2008.”
Write to Adam Orlando at Mining.com.au
Images: Stock & The Canadian Mining Report
