In Brazil alone, $64.5bn is expected to be invested by 2028, according to the Brazilian Mining Institute, not counting potential acquisitions
10/21/2024
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Interest in tech-related and energy-transition metals like lithium and copper has driven a surge in the search for mineral deposits and projects worldwide, spurring mergers and acquisitions in the sector. In addition to these minerals, gold remains in high demand, with Brazil being a key target for foreign companies and governments due to its significant reserves.
Globally, according to Dealogic data, announced M&As in the industry amounted to $48 billion by August, an 8% year-over-year increase, including deals that impacted Brazil. This figure could have nearly doubled had Anglo American not declined BHP’s $43 billion acquisition offer in May.
Experts and industry executives noted that this trend is likely to accelerate in the coming years. The planned investments are substantial: in Brazil alone, $64.5 billion is expected to be invested by 2028, according to the Brazilian Mining Institute (IBRAM), not counting potential acquisitions.
Australia’s lithium giant Pilbara Minerals entered Brazil in August by acquiring fellow Australian company Latin Resources for $370 million. Last month, Pilbara announced a R$2.2 billion investment to develop its Salinas project in Vale do Jequitinhonha, Minas Gerais.
“The Salinas Lithium Project, with its potential to become one of the world’s largest hard rock lithium operations, will be vital for consolidating our leadership position in the North American and European battery markets,” said Dale Henderson, managing director and CEO of Pilbara Minerals.
Sigma Lithium, the leading company in Brazil’s lithium sector, also operates in the Jequitinhonha River region.
In the same week, G Mining Ventures purchased the rights to explore the CentroGold gold project in Maranhão from BHP. Shortly before, Australia’s St. George Mining announced its acquisition of the Araxá project, a niobium and rare earth metals operation in Minas Gerais.
“This activity will remain very strong. Since 2020, the number of transactions has accelerated,” said Alexandre Pierantoni, executive director of Kroll in Brazil. Between 2013 and 2019, Mr. Pierantoni noted, the number of global M&A deals in the industry averaged 750 per year. Since 2020, that average has risen to 1,200 to 1,300 deals annually—in 2023 alone, according to Bloomberg data, there have been 1,500 transactions, moving $80 billion.
The global drop in interest rates is expected to fuel further deals, although volatility in commodity prices makes asset valuation more challenging. “There are triggers that drive demand, like the energy transition. But this comes with a cost, meaning the world can’t completely abandon the [energy] base it’s built. Significant investments in oil and gas are still ongoing,” Mr. Pierantoni said.
In recent years, countries’ commitments to reducing greenhouse gas emissions have fueled growing demand for electric vehicles, whose batteries depend on lithium, copper, rare earth elements, and other minerals. Technologies like wind energy generation and solar panels also rely on these critical minerals.
“We are in an extremely productive phase in terms of new research, especially for minerals related to the energy transition, like lithium, nickel, vanadium, and rare earth elements. There is significant appetite in Brazil for these minerals,” said Julio Nery, director of sustainability at IBRAM. “This surge in research is happening in many countries,” he added.
*By Stella Fontes, Marcos de Moura e Souza — Sao Paulo
Source: Valor International