São Paulo – Brazil went against the grain of global mining and increased the volume of mergers and acquisitions in the industry last year. According to a study by PricewaterhouseCoopers (PwC), mergers and acquisitions in Brazil totalled US$ 17.7 last year, as against US$ 3.6 billion in 2007.
The global mining industry, in turn, recorded a decrease of 61% in mergers and acquisitions in 2008, having achieved a level last seen in 2005. According to the publication, the expansion of the industry on the South American continent, from US$ 8.7 billion in 2007 to US$ 22.8 billion in 2008, took place due to the intensification of activities in Brazil.
Similar to Brazil and contrary to the global trend, China also increased its business volume in the mining industry. The country recorded significant growth in investment volume: from US$ 6.7 billion in 2007 to US$ 25.5 billion in 2008.
The study, entitled Mining Deals 2008, also points out that the development of the Chinese mining industry is a trend, given the fact that in February 2009, transactions among large companies were announced, such as the US$ 19.5 billion investment of Chinalco in Rio Tinto. There was also China Minmetals’ US$ 2.5 billion bid for purchasing Oz Minerals, and a US$ 900 million investment of Hunan Valin in Fortescue.
The negative scenario, which led to a 61% reduction in the level of activity of mergers and acquisitions in the global industry, is a consequence of the collapse of Lehman Brothers in September 2008, which shook the industry and caused a sharp reduction in the prices of commodities.
"We are witnessing a unique negotiation environment that is going to alter the chain of command in organisations. The inconsistency in the prices of commodities, coupled with the obstacles created by the financial crisis, left the industry polarised between strong and weak," explained PricewaterhouseCoopers partner Tim Goldsmith, specialized in the mining area, in a press release.
*Translated by Gabriel Pomerancblum
