The quest for copper and other strategic minerals in the global pursuit of a just energy transition has been identified as one of the factors fueling mergers and acquisitions (M&A) in South Africa’s mining industry.
According to PwC’s newly launched SA Mine Report 2024, the industry has in 2024 been dominated by retrenchments, falling stock prices, restructuring for efficiency, and efforts to become more fit-for-purpose as mining commodity prices, save for gold, came under pressure.
PwC Africa Energy, Utilities and Resources Leader Andries Rossouw said in a media release that “safeguarding their balance sheets to survive the down cycle and to position them for opportunistic prospects” had been “front of mind” for many companies.
Commenting on the market’s performance and surging M&A activity in the mining industry, Rossouw said the need for efficiencies, diversification, and strategic alignment had resulted in a hive of merger and acquisition activity in the past year.
“The quest for copper and other strategic minerals, broader consolidation, and operational synergies, and diversification and strategic realignment to create shareholder value have been the main themes emerging from M&A transactions,”
PwC South Africa Mining Assurance Partner, Vuyiswa Khutlang, echoed that “The increase in deal values aligns with global trends, and this is being driven by the quest for critical minerals.”
Not spared the recent volatilities that have challenged many businesses, Khutlang said the general commodity price downturn had again emphasized the importance of a strong balance sheet, which could either be a drag or a key resource of agility and strength.
“A strong balance sheet provides options in sourcing capital, which is critical for a cyclical industry. There are numerous capital sourcing options, but one of the trends we have noted is that mining companies are increasingly using green and sustainability loans to support operations, which aligns with their own and global sustainability goals,” he noted.
