Digging deals — M&A transactions surge to $10-billion in SA mining sector in 2023/24

BHP’s $50-billion (R868-billion) bid for Anglo American may have been a flop, but South African mining companies have been on an absolute tear when it comes to merger and acquisition transactions (M&A).

According to PwC’s annual SA Mine report for 2024, South Africa's mining sector was involved in deals that amounted to just over $10-billion in the 12 months to the end of June, dwarfing the $1.5-billion recorded for the previous 12-month period and exceeding the combined total for the previous five years.

In total, there were 32 such transactions compared with the 24 recorded in the previous 12 months.

“The South African mining sector has experienced a hive of M&A activity in the past year, driven by factors that have reshaped the industry’s dynamics and outlook,” the report, released on Tuesday, said.

“The quest for copper and other strategic minerals, broader consolidation and operational synergies, and diversification and strategic realignment to create shareholder value have been the main themes emerging from M&A transactions.”

Coveted copper was Anglo’s main attraction for BHP, a transaction that would have boosted the period’s M&A profile in dollar terms six-fold had it gone through.

But the scramble for the green metals and critical minerals needed for the global decarbonisation drive was still part of South Africa’s mining M&A story.

 Among the notable transactions highlighted in the report, Ganfeng Lithium — a China-based lithium manufacturing and processing company — acquired 19.9% of South African Lithium, while Copper 360 picked up Nama Copper from Mazule Resources.

African Rainbow Minerals acquired the remaining 50% stake in its joint venture that operates the Nkomati Mine from Norilsk Nickel Africa. Nickel also has a green sheen these days because of its applications in the energy transition.

“Another key driver of M&A activity in the South African mining sector has been broader consolidation and operational synergies, as mining companies have sought to improve their efficiency, productivity and profitability amid a challenging economic climate,” PwC said.

Or in simpler terms: consolidate to cut costs when times are tough.

On the consolidation front, Impala Platinum took over neighbouring Royal Bafokeng Platinum, a transaction that the report noted “will eventually allow for optimised processing infrastructure and other synergies”.

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