Battery minerals transactions increased as companies diversify...

Battery minerals transactions increased as companies diversify supply away from ChinaStrategic growth, diversification and securing supply have been the key drivers for M&A activity in the battery minerals sector. While deal value more than doubled to US$2.5b in 2019, deal volume increased by 3.8% to 27 deals. Other sectors, such as oil and gas and automotive, have shown increasing interest in battery minerals as they seek to diversify or enter long-term supply agreements. One of the key highlights in 2019 was the acquisition of Kidman Resources by Wesfarmers to benefit from increased global demand for electric vehicles. The mining sector is playing a vital role in the transition to clean energy, and investment in battery minerals will play a large role in the next wave of M&A. Continued investment is expected as players diversify the sourcing of battery minerals from countries other than China. For example, companies globally are looking to acquire cobalt and lithium mines in Australia and South America to secure supply of strategic minerals. In addition, players are diversifying intermediate cobalt products, as manufacturers are trying to reduce the amount of cobalt used in batteries and focus on developing more nickel-intensive ones. While the recent decline in lithium prices is likely to deter industry players making near-term investments, financial investors may see this as a buying opportunity, particularly as investment in the industry remains low compared with other sectors.
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