Brazil and China led in mining M&A deals in 2008: PwC report

Brazil were the leaders in mining deals for 2008 with China close behind even with thre industry experiencing a violent downward tailspin with many companies spending the earlier part of the year doing deals or resisting unwelcome overtures and welcoming back potential buyers with open arms in the last quarter.

Releasing the mining deal report for 2008, PricewaterhouseCoopers said that the most significant surge in deal activity came in Brazil with total deal value in South America rising dramatically from $8.7 billion in 2007 to $ 22.8 billion in 2008, of which Brazil accounted for deals worth $17.7 billion – up nearly fivefold from $3.6 billion in 2007.

A large increase was also seen in deals involving Chinese buyers with the value of deals rising fourfold from $6.7 billion in 2007 to $25.5 billion in 2008.

Deals involving Chineses acquirers is continuing and, in fact, rising in 2009 with the controversial $19.5-billion deal between Chinalco and Rio Tinto announced in February (See: Chinalco invests $19.5 billion in Rio Tinto to raise stake to 18 per cent), China Minmetal's $2.5-billion bid for Oz Minerals and Hunan Valin's $770 million investment in Fortescue. (See: China invests heavily in Australian miner-Fortescue)

Kameswara Rao of PricewaterhouseCoopers', said that ''We see a unique environment that will reshape much of the sector's ownership. The rapid decline in commodity and equity prices, combined with the financing constraints with the global credit crisis, has left the sector polarised between the strong and the weak.''

''Indian mining and user industries have an unprecedented window of opportunity to gain access to targets that might be denied to them in normal circumstances. The raw material supply constraints are likely to persist in the Indian market, and as Indian mining operators are more closely integrated with end-use, the current lower valuations help then secure cheaper supplies for future. This may be just what the local brave hearts are looking for.''