OREANDA-NEWS. April 30, 2008. According to the survey’s results the number of mergers and acquisitions in the mining sector has dramatically increased. The volume of these deals in the mining sector has increased by 69% versus 2006 and amounted to 1,732 in 2007, reported the press-centre of PricewaterhouseCoopers.

The total value of deals has reached USD 158,9 billion, which is 18% higher than in the previous year. An upward trend in mergers and acquisitions is typical for mining companies of any size.

Moreover, in the period from 2005 to 2007 the number of major deals worth USD 1 billion and higher has tripled. A special mention should go to Chinese and Russian companies which have executed a number of major acquisitions in North America and Australia. The total value of deals executed by mining companies of these two countries has increased sixfold from USD 5,3 billion in 2005 to USD 32,7 billion in 2007. Thus, one fifth of the world deals value in the mining sector is attributable to these two countries.

According to the survey, there is no sign of decrease in M&A activity as a result of the financial crisis. On the contrary, the number of deals in the mining sector announced in the forth quarter of 2007 more than doubled as compared to the relevant period of 2006. The latest major deals of the main market players show that 2008 will be unprecedented in terms of M&A activity in the mining sector.

In 2007, Russia took a strong position in the global M&A market in the mining sector primarily due to a significant increase in the number of various asset acquisitions in Russia on the one hand, and an explosion of Russian companies’ expansion rate in the international market on the other hand. In 2007, the total value of asset acquisitions in Russia increased by 16% and amounted to USD 19 billion.

In its turn, Russian customers’ activity increased by 66% and the value of assets acquired by them was USD 26 billion (in 2006, this figure was USD 15,7 billion). Such significant growth results mainly from major deals’ value rather than their total amount.

The list of Russian mining companies’ acquisitions is headed by the following two deals: acquisition by Rusal of 25% of Norilsk Nickel’s shares for USD 13,3 billion and a tender acquisition by Mechel of shares of state Russian mining companies YakutUgol and ElgaUgol in the process of privatization (the total value of the deal was USD 2,3 billion).

An acquisition by Norilsk Nickel of LionOre, a Canadian nickel extraction company, for USD 5,4 billion has highlighted the materiality of international expansion of Russian mining companies.