Shares of Newmont Corporation (NYSE: NEM) inches up in pre trading session on Tuesday as in a fragmented industry, the world’s largest miners have spent years calling for consolidation. Newmont Corp.’s $17 billion bid for Australia’s Newcrest Mining Ltd. suggests that it is finally happening on a large scale.
While there have been other significant deals in the past year, including Agnico Eagle Mines Ltd.’s $10.4 billion acquisition of Kirkland Lake Gold Ltd. and a $4.8 billion acquisition of Yamana Gold Inc. that is set to close in the coming weeks, the latest move by the world’s largest gold producer indicates a preference for larger-scale transactions.
Newmont’s all-stock offer would be the largest gold mining takeover in history, coming as mining titans BHP Group Ltd. and Rio Tinto Group have pursued multibillion-dollar copper deals. The flurry of activity is taking place as producers struggle with higher operating costs, declining output, and more difficult-to-mine resources, while new deposits are becoming more difficult to find. Adding to the mix is a surge in demand for battery metals, which are the backbone of the global transition away from fossil fuels and toward cleaner energy sources.
The Newmont transaction “shows that, while consolidation has taken a while, we’re finally getting there,” Yamana’s founder Peter Marrone said over the phone Monday. “With this transaction, there will be fewer other senior companies, so it appears to me that the mid-tiers are the logical next place for consolidation.”
Since the outbreak of the pandemic, the number of gold mining takeovers has slowed, giving smaller producers an opportunity to grow, while the two top bullion producers, Newmont and Barrick Gold Corp., have focused on their own resources. Others have broken into the top tier of gold mining, with Agnico buying Kirkland Lake a year ago to cement its position as the third-largest bullion producer. Pan American Silver Corp. partnered with Agnico to acquire and split up Yamana, propelling the Vancouver-based miner into the Top 5 global silver output rankings.
Meanwhile, BHP intends to consolidate its position as one of the world’s largest copper producers with its proposed $6.4 billion acquisition of Oz Minerals Ltd. in Australia. Rio Tinto spent $3.1 billion in December to acquire full control of a massive copper mine in Mongolia through the acquisition of Turquoise Hill Resources Ltd. Vale SA, the Brazilian mining giant, is looking to sell a stake in its base metals business in the coming months. In addition, Saudi Arabia’s state mining company announced in January a new venture to invest in overseas mining assets.
