Metals Pricing Environment; Corporations Are Pursuing Development Via M&A Activity In Latin America

As metals prices rise, mergers and acquisitions (M&A) activity is picking up steam in Latin America's mining industry.
M&A

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BNamericas has collated industry data showing that mining corporations completed or announced at least nine US$100 million-plus M&A agreements targeting LatAm assets in 2021 with a total value of US$9.24 billion.  The amount is comparable to the $2.58 billion in 2020 when acquisitions were halted owing to COVID-19 limitations and the $14 billion in the preceding year when Newmont’s $10 billion acquisition of Goldcorp dominated volumes.  One-fifth of the company’s 2021 investment plans are aimed towards lithium assets, which are forecasted to be in high demand due to the anticipated growth in electric car sales.

In November, it was reported that Capstone and Mantos would unite to become Capstone Copper, a leading copper producer in the Americas.  Capstone’s Cozamin, Pinto Valley, Santo Domingo mines, and the Mantoverde mine in Chile will be combined with Mantos’ Mantos Blancos and Mantoverde mines.  With fully-funded investments at Mantos Blancos and Mantoverde, the united enterprise aimed to increase output to roughly 260,000t/y copper by 2024 from around 175,000t/y copper in 2021.  The expansion of Santo Domingo will raise production to around 380,000 metric tons per year.  After completing a US$3.06 billion merger in August, Orocobre and Galaxy Resources became the fifth-biggest lithium producer in the world.  The Salar de Olaroz operation and the Sal de Vida project, both in Argentina, are among the most critical assets of the united corporation, which was renamed Allkem in December.

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Neo Lithium’s Tres Quebradas (3Q) lithium brine project in Argentina is the focus of a Cdn$960 million (US$751 million) all-cash bid from Zijin Mining, announced in October.  As Zijin’s chairman Chen Jinghe put it at the time, the 3Q project “represents a crucial complement to Zijin’s increasing global asset mix” and “a solid decision for Zijin to join the sector of new energy metals.” With the sale likely to be completed this quarter, shareholders of Neo Lithium approved the agreement in December.

A Cdn$625mn (US$485mn) cash and stock bid from Lundin Mining will buy the Josemara copper-gold property in Argentina as part of its proposed acquisition of Josemaria Resources.

Throughout a 19-year mine life, Lundin expects Josemara to generate more than 130,000 tons of copper and 225,000 ounces of gold per year.  The Lundin Group includes both Lundin and Josemaria Resources.

As a result of Equinox’s $480 million acquisition of Premier Gold Mines in April, the company now owns two new projects: Canada’s Greenstone and Mexico’s Mercedes.  After months of negotiations, the business has agreed to sell Mercedes to Bear Creek Mining in December for a total of US$125 million in cash and stock.

Millennial Lithium, whose principal asset is the Pastos Grandes lithium project in Argentina, has been the subject of a bidding battle between Lithium Americas and several other interested parties.  When it made its US$400 million offer in November, Lithium Americas beat out Chinese competitors CATL and Ganfeng Lithium to the Cauchari-Olaroz lithium project in Argentina and the Thacker Pass lithium project in the United States.  Before the end of the month, this agreement should be concluded.  Ganfeng Lithium made a sweetened buyout offer to Bacanora Lithium directors in August, and the British company approved it.  Ganfeng Lithium wants to purchase the whole Sonora lithium property in Mexico for US$420 million.  Mexican anti-trust permission was secured in December, as well as shareholder backing, for the 386mn British pounds (US$522mn) bid.

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