Mining Industry

Q4 2023: Mergers and Acquisitions Trend Report

Industry Overview

• The industry involves the extraction of precious minerals and other geological materials from the Earth. The industry can be classified into four subsectors:
  1. Oil and Gas Extraction
  2. Coal Mining
  3. Metallic Mining, including the extraction of gold, silver, iron ore, copper, nickel, lead, among other metallic commodities
  4. Nonmetallic mining, such as stone, sand, and gravel mining
• The mining industry is expected to experience long-term structural decline due to increased pace of energy transition and weak consumption outlook.
• Many of these subsectors have been going through structural transitions as more countries seek to combat climate change by limiting fossil fuel emissions.
• The COVID-19 pandemic has accelerated the global energy transition as a combination of temporary economic pause and fiscal stimulus targeted at green energy initiatives have begun to shift global energy consumption.
• The CARES act provided $4.5 Billion to miners and the recently passed infrastructure bill will provide consistent demand for stone, sand, and gravel miners.

Key Industry Trends

• The US thermal coal demand outlook is set to deteriorate in the second half of the decade, as power supply shifts away from coal at an increasing rate, putting downward pressure on thermal coal prices. The US government is currently committing to reach net zero emission by 2050.
• Worldwide oil and fossil-fuel supply has diminished while prices have soared as a result of the ongoing conflict between Russia and Ukraine and Saudia Arabian supply cuts. Energy prices remain to be the driving factor towards industry-wide revenue.

Recent M&A Transactions

Historical Performance

• The Oil and gas Extraction and O&G Gas Field Services industries account for 88.4% of industry revenue in 2023.
• The mining industry has been largely dependent on foreign resources with imports regularly accounting for over one third of industry revenue.
• Over the past five years, Mining industry revenue has increased at an annualized rate of 3.9% due to rising prices in oil and gas and inelastic demand for oil consumption.

Future Industry Growth

• The Mining Sector is forecasted to decrease revenue by an annualized 4.1% to $760 billion over the five years to 2028.
• Demand and production are expected to slow due to increasing number of idle mining facilities and decreasing sector employment.
• Price of crude oil and natural are expected to decrease at an annualized 7.5% and 13.1% respectively.