Big Mining Acquisitions Will Define 2008 Says Report

Almost all the world's mining companies will grow through acquisition over the next two years as the boom in metal prices continues, according to a new report by Ernst & Young.

The 2007 The Year of the Hunters and the Hunted: The Mining & Metals Global Transactions Survey is based on interviews with major global mining and metals companies, 40 percent of which say acquisition will be their sole growth strategy.

According to Ernst & Young, concerns about resource security is inspiring companies to acquire others as the credit crunch poses new challenges for smaller miners.

Ernst & Young global mining and metals transactions leader Michael Lynch-Bell says that despite the global credit market, the rate of consolidation is not only likely to continue but could accelerate in the short- to medium-term, with the possibility of three US$50bn-plus deals before the end of the year.

For Lynch-Bell, 2008 will be the year "that defines the hunters and the hunted".

Ernst & Young says it expects to see more divestment activity in the market through the rest of 2008 as some companies look to take advantage of high prices and discard non-core assets.

Last year saw a record number of M&A transactions in the mining and metals sector, with a total of 903 deals completed, worth a total of US$210.8bn.

By Ozge Ibrahim