Mining Deals: 2008 Annual Review

March 08

After the rise comes the fall. The mining industry experienced a violent downward tailspin in the last three months of 2008 which has turned much of the deal-making in the sector upside down. After two years of record M&A activity, 2008 turned out to be a year of extremes with the earlier part of the year following a pattern established in previous years before plunging in a sudden and dizzying vortex in the closing months.

We examine both the rationale behind the overall trends and look at the key individual deals. We look at the year under review, the context of the preceding three years, and ahead to the future direction of deal-making in the sector.

We also highlight, in a series of deal dialogues throughout the report, some of the critical issues for companies engaging in deal activity within the sector. Drawing on our global experience as an adviser to mining industry M&A players, our commentary addresses all key markets in the sector.

Looking ahead, we examine the effect of continuing uncertainties on deal-making in the sector. We look at the consequences of the very different environment. We consider the potentially sector-transforming opportunities that will arise and the key role of China in deal-making.

Our conclusion is that, while the short-tem outlook for mining deal activity from western companies is subdued, the constraints and contrasts in the market will create their own impetus for deal momentum. Indeed, those companies that have funds available may well find 2009 to be a year when they can utilise their financial strength and achieve acquisitions at long-term bargain basement prices.