Outlook brightens for mining in 2014

Outlook brightens for mining in 2014

 

Funding for mining developments and for mergers and acquisitions activity is expected to pick up significantly in 2014 and confidence is returning to the sector according to a report from consultants Ernst & Young.

 

There is little doubt that growth is back on the mining and metals agenda, says E&Y

in ‘Mergers, acquisitions and capital raising in mining and minerals’.  E&Y’s report says expectations of commodity price rises in the medium term will be one of the factors driving increasing investor interest in the mining sector after 2013 seeing the lowest amount of mergers and acquisitions activity since 2006.

 

Banks are expected to compete to offer leveraged loans for quality mid tier miners and developers engaged in less risky jurisdictions. ‘Juniors’ however are unlikely to attract the same scale of investor and funding interest until there is more evidence of sustained commodity price rises and improved cost controls in the industry. Many juniors are said to be in survival mode and to have effectively suspended exploration and development activities to preserve cash. Investors are looking for low risk, near term and high yield opportunities which early stage juniors cannot offer.

 

E&Y say 2013 was an ‘inflection point’ when management and investors came to terms with a new investing paradigm and global exploration spend fell. Recent increasing private capital and financial institution interest in the sector however supports the view that the market bottom has been reached. 

 

E&Y says it expects price volatility for minerals to continue for at least another two years but despite this mergers and acquisitions and mining job creations are expected to grow during the first half of 2014 driven by financial investors and equity backed alternative capital providers. This will be driven by anticipated longer term commodity price recovery and by the “application of in house technical experience to drive operational, technical and financial influence”.

 

Photo: Corrie Barklimore

Please rate

Comments 

Name
Email
  Ctrl + Enter

Most Read

Caledonia Water bags infrastructure contract with Scottish Water

Caledonia Water bags infrastructure contract with Scottish Water

Caledonia Water Alliance – a Morrison Utility Services and AECOM joint venture – has landed a six-year extension on its water infrastructure contract with Scottish Water Following confirmation of the new agreements, from 2021-2027 Caledonia Water Alliance (CWA)

Skanska bags £135m revamp of Canary Wharf’s first office

Skanska bags £135m revamp of Canary Wharf’s first office

Skanska has won the contract to deliver the main structural revamp of Canary Wharf’s first major office at 30 South Colonnade in London Docklands.The major office deal is its second to be signed off this week after confirming an £83m contract with Royal London Asset Management to build

MWH Treatment secures key role on Scottish Water framework

MWH Treatment secures key role on Scottish Water framework

MWH Treatment (MWHT), together with partner Galliford Try, has successfully secured a six-year contract extension on Scottish Water's non-infrastructure framework for the Strategic Review 2021-27 (SR21) investment programme. MWHT, a sector leading solution provider operating across the UK water

This website uses cookies to enhance your user experience. By continuing to use this site, you consent to our use of these cookies. See our Cookie Policy.