Canadian dealmakers expect low-carbon shift will drive mining M&A

Copper Mountain Mining

20/04/2023 11:00

By Maiya Keidan
       TORONTO, April 20 (Reuters) - Canadian advisors to
mergers and acquisitions (M&A) expect a shift toward low-carbon
technologies and government subsidies for them will spur
dealmaking in mining for years to come and some are already
gearing up for it.
    Critical minerals including copper, nickel, lithium, and
cobalt - all abundant in Canada - have a big role in the
manufacturing of renewable energy systems, especially electric
vehicles (EVs), making those miners prime candidates for
dealmaking.
    "We're very bullish on the next couple of years in mining,"
said Bill Vlaad, a Toronto-based recruiter who specializes in
the financial services sector.
    Vlaad said his team is adding a new recruiter shortly with a
mining and capital markets background. Clients are hiring mining
people within dealmaking teams, and boutique M&A advisory firms
are adding talent, mostly in mining, he said. 
    Canada this year expanded an investment tax credit to
equipment needed by mining companies - and any other companies
in the EV supply chain - to extract or process critical
minerals. But companies are already scrambling to scale up.
    Mining deals with any Canadian involvement hit $29.5 billion
in the first few weeks of the second quarter of this year, the
best quarter since the third quarter of 2007, according to data
from Refinitiv.
    For copper and nickel deals, it was the best quarter on
record since at least 1990, the data showed.
    Over the past month, Canada's copper and zinc miner Teck
Resources Ltd  TECKb.TO  has rebuffed multiple bids from
Glencore Plc  GLEN.L , while Canadian Lundin Mining  LUN.TO 
bought a 51% stake in Chile's Caserones mine for $950 million.
    This month, Canadian copper miner Hudbay Minerals Inc
 HBM.TO  announced it was buying peer Copper Mountain Mining
Corp  CMMC.TO  in a $439 million deal, and Grid Metals Corp.
said it was acquiring additional land in southeast Manitoba,
prospective land for nickel and copper.
    At the Prospectors and Developers Association of Canada
conference in Toronto, one of the biggest mining conferences in
the world, investment bankers predicted that deal activity would
kick off in companies offering assets like copper, due to the
low availability of new mines in the space. 
    Neil Selfe, founder and CEO at INFOR Financial Group, told
Reuters the firm recently shifted about 10% of junior staff away
from less active sectors to support mining franchise leaders. 
    "As we enter what many believe will be a sustained upswing
in the resource sector, we believe we are uniquely positioned to
help Canadian corporates capitalize on the opportunities that
present themselves," said Deep Khosla, Co-head of Canadian
corporate and investment banking at Bank of America.
    The bank recently hired Kelsey Scott in Calgary as head of
Canadian Energy Investment Banking, promoted Garrett Healey in
Toronto to oversee its metals and mining business, and promoted
Felipe Rojas to complement their coverage efforts on the
corporate banking side.
    Bank of America ranked number two for dealmaking in Canada
in the first quarter, according to data from Refinitiv.
    "Whether the mining sector as a whole is going to be on a
tear is something everybody is prepping for," said a banker at
another Canadian lender who was not authorized to speak on the
record. "Mining is one of those sectors where you really want to
be prepared for the inevitable market pickup."

 (Reporting by Maiya Keidan, additional reporting by Divya
Rajagopal; editing by Steve Scherer and Chizu Nomiyama)
 ((Maiya.Keidan@thomsonreuters.com; 44 207 542 1594; Reuters
Messaging: maiya.keidan.thomsonreuters.com@reuters.net))