E&Y: UK Lags Behind in Mining Industry M&a, Canada Wins

Lucas Gilmore, “Big 4″ observer
February 24, 2011 /

Ernst & Young’s latest report on the mining industry deal-making has shown favorable figures for Canada, which represented more than 20 percent of mining deals and more than 30 percent in gold-related transactions made last year on a global scale.

However, the accounting and consultancy firm reported a bleak 2010 record for the UK mining industry, falling 49 percent off its 2009 peaks amid booming deals elsewhere in the world.

Meanwhile, emerging markets accounted for 43 percent of the total mining industry deals and 50 percent overall in acquisitions.

Mining industry deals in Canada totaled $23.8 billion in 2010, and is likely to climb higher this year with the C$9 billion anticipated combination in the portfolios of Lundin Mining and Inmet Mining.

The largest deal made in Canada last year involved the merger between Red Back Mining and Kinross Gold that closed at $7.4 billion.

According to Ernst & Young, the growing confidence felt across the mining industry and tight competition with emerging markets will spur more deals in Canada this year.

Of all the companies enjoying the benefits of renewed balance sheets, the Canadian mining industry has shown an outstanding rebound aided by high prices of copper and gold in 2010, which a PricewaterhouseCoopers survey in November 2010 projected to continue rising this year due to financial concerns of companies.

The mining companies that responded to the survey said the price of gold would play between US$1, 400 to US$3, 000 per ounce, while the others expected it to close at US$1, 500 per ounce.

Tom Whelan, Ernst & Young’s national mining industry leader for Canada, said the factors contributing to the M&A boom in Canadian mining industry included resource security concerns, high prices of commodities, available capital and refreshed cash flow.


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