Gold’s Deal Blitz Could Draw In the Rest of the Mining Sector – by David Stringer and Danielle Bochove (Bloomberg/Yahoo – December 11, 2019)

(Bloomberg) — A torrent of deal-making among gold producers that’s pushed M&A in the sector to an eight-year high is seen spilling over into the wider mining industry — if there’s a rally in global growth.

Pending and completed gold acquisitions have reached about $33 billion so far in 2019, the highest since 2011, according to data complied by Bloomberg. That’s as deals among all mining companies have declined about 29% from last year to $60 billion, the data show.

A revival in the economic outlook, with higher interest rates and inflation, would prompt other metals producers to rethink their current strategy of cutting debt and lifting shareholder returns — and focus again on pursuing growth, according to Christopher LaFemina, a New York-based analyst at Jefferies LLC.

“Until now, the market has rewarded companies for austerity” amid a chase for yield, LaFemina said in a phone interview. “We will see a significant acceleration of M&A activity when global growth recovers.”

In recent times, the biggest miners, including Rio Tinto Group and BHP Group, have made only some small investments in undeveloped projects and authorized new spending on expansions at existing operations.

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