July 25, 2011 / 8:40 AM / 9 years ago

Mining M&A doubles in first half: report

LONDON (Reuters) - Mining mergers and acquisitions doubled in the first half, coming close to the total for the whole of last year, although the pace was tempered by concerns over global macroeconomics and resource nationalism, advisory and accountancy firm Ernst & Young ERNY.UL said on Monday.

A coal merchant holds up a lump of coal for the camera in his yard in Melmerby, northern England November 5, 2008. REUTERS/Nigel Roddis

Total deal value jumped to $96.3 billion from $47.9 billion in the year-earlier period, in part reflecting the larger size of deals in the sector. There were $113.7 billion of deals made in the whole of last year.

Coal deals led the way in terms of value while gold transactions were tops by volume.

“Momentum is growing,” Lee Downham, Ernst & Young’s global mining & metals transaction advisory leader told Reuters, adding that he expects more deals to be completed in the second half than the first.

“We could see over $200 billion worth of deals by the end of the year,” he said.

The number of initial public offerings in mining & metals rose 30 percent to 73 in the first half, while total proceeds more than doubled to $13.0 billion, mainly on the $10 billion listing of commodities trader Glencore (GLEN.L).

“It’s difficult to say the numbers are up because of Glencore, because you could argue that if Glencore didn’t happen the money could have gone to other IPOs,” said Downham.

He expects to see a significant number of mining and metals IPOs in the second half and beyond, although he said it would only take an event like a Greek default to delay IPOs.

“There are lots of IPOs in the second half that could have happened in the first half if Glencore hadn’t listed,” he said.

Miners operating in Africa, the CIS, India and South America are looking at listing in London.

Ernst & Young is working on a number of mining IPO deals at the top end of the FTSE 250 index and a couple of larger listings.

“They are between the $2 billion to $4 billion market cap size on the whole, but we’ve got a couple that are significantly bigger than that,” he said.

The companies looking to IPO operate in a diverse range of commodities including precious group metals, copper, gold and iron ore.

He added that the firm is as busy as it was at the peak of the market in 2006/7.

Reporting by Julie Crust; Editing by David Holmes

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