Critical minerals deals growing in valueThanks to high prices...

Critical minerals deals growing in valueThanks to high prices and low debt levels across the sector, gold continues to be a major driver of M & A action, making up 70% of the deal value across the top 40 miners.But conscious of ESG and the theme of the energy transition, commodities like copper, nickel and lithium are taking a larger share of the majors’ M & A spend.Overall M & A spend increased 200% last year, with the number of deals announced rising 60%.Money spent by the world’s Top 40 on critical minerals projects has increased by 159% since 2019.High profile examples include Rio Tinto’s (ASX:RIO) US$825 million purchase of the Rincon lithium brine project in Argentina and South32’s (ASX:S32) decision to pay US$2.5 billion for a share of the Sierra Gorda copper mine in Chile amid the BHP spinoff’s internal push to reposition itself as a base metals giant.Bendall said miners may need to look into jurisdictions they otherwise wouldn’t or consider producing assets with shorter lives than their previous investment thresholds to ensure they can increase their exposure to transition metals.“Remember the top miners typically look for what we refer to as tier one assets which are long life, low cost. These commodities don’t present themselves geologically often like that,” he said.“The first thing they’re going to have to do is consider their horizons, their investment criteria and often that’s going to be shorter life assets.“We have seen an increasing number of deals being done by big miners into critical minerals. Rio Tinto purchased Rincon (lithium) recently, for example, now that was on the back we suspect of the Jadar resource in Serbia being taken off them.“We’ve certainly had BHP looking at more nickel resources in North America. So I’d expect the big players will move quite swiftly.“They’re going to have to pay a fair dollar though.” QUOTE in * June 2022The impact is just beginning IMO.