May 17, 2020

Are M&A's the key to reviving the gold industry in Australia?

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2 min
Are M&A's the key to reviving the gold industry in Australia?
Mergers and acquisitions (M&A) in Australia hit a ten-year low in 2014, aiding to the collapse of investor confidence and the downturn in the gold s...

Mergers and acquisitions (M&A) in Australia hit a ten-year low in 2014, aiding to the collapse of investor confidence and the downturn in the gold sector.

In recent months, however, Australia has been riding a wave of positivity as gold prices rise, costs lower and more favorable currency conditions occur. The answer: mergers and acquisitions.

• Related content: 2015: Year of the Mega Mergers

"Everyone is looking for assets that enable them to grow. We've seen more M&A in Australia in 2015 than in the past five years," Ian Murray, chairman of Perth-based Gold Road Resources Ltd told Reuters,

So far this year, Australia’s merger and acquisition activity in the gold sector has seen 26 announced deals worth more than $1.7 billion.

Recent deals include Evolution Mining acquiring Barrick Gold’s Cowal mine for $550 million and Newcrest Mining’s exploration deal with Mungana Goldmines Limited to explore for copper-gold in North Queensland.

“We are already starting to see that in completed deals, with gold accounting for more than a quarter of all global deals by value during the first quarter – and we have continued to see it in announced deal activity,” said Murphy.

As confidence in adjusted cost bases grew, and the cycle stage by commodity became more apparent, investors, including financial investors, were likely to begin taking stronger positions in the sector. Adding fuel to the M&A frenzy are cuts in central bank interest rates, aimed at lowering the Australian dollar.

• Related content: [CHART] Timeline of Mining Mergers and Acquisitions

"Assets are being sold at a low point in the cycle and if you position yourself to accumulate them, you are going to do very well,” Evolution Executive Chairman Jake Klein told Reuters.

The gold sector in Australia is expected to have an exciting year in 2015. As major miners continue to slim down in an effort to reduce debt, it will enable local producers to pick up assets at favorable prices. In return, the investment attention in Australia may return very soon. 

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Jul 20, 2021

British Lithium Pressured Due To Calls for Electric Cars

3 min
The ever-increasing need for electric vehicles is mounting pressure on British Lithium as the 2035 deadline inches closer

The British demand for lithium is set to reach 75,000 tonnes by 2035 as the government works towards their ban on the sale of high-polluting diesel and petrol vehicles within the UK. This comes as automakers worldwide continue to insist on the benefits electric vehicles will have on slowing the rate of climate change. 

It is estimated that the UK will require 50,000-60,000 MT of lithium carbonate a year by 2035 for battery production to satisfy government needs. This is assuming production remains at 1.2 million vehicles per year, and the amount of lithium required does not increase.

British Lithium, which hopes to begin constructing a quarry to produce 20,000 MT of lithium carbonate a year in a $400 million investment, are not without competitors, both within the UK and abroad. 

Competition For Lithium Rises In Europe 

After only five years after its initial launch, Cornish Lithium is setting its sights on becoming a UK powerhouse in mining lithium, aiming to begin commercial production in under four years. Jeremy Wrathall, a former investment banker and current managing director of Cornish Lithium, had the future in mind when founding the company. 

“In 2016, I started to think about the electric vehicle revolution and what that would mean for metal demand, and I started to think about lithium,” he said in an interview with AFP. “A friend of mine mentioned lithium being identified in Cornwall, and I just wondered if that was a sort of unrecognised thing in the UK.”

Lithium was first discovered in Cornwall around 1864 and has not been mined again since 1914 when it was produced as an ingredient in fireworks. Now, however, Cornish Lithium is reportedly in the testing stage to see if the metal can be produced commercially to meet the growing demand required for the electric car sector. 

Despite Cornwall’s close historic ties to mining lithium, Wrathall insists that the project is purely commercial. 

Cornish Mining Revival For Lithium Production

“It’s not a mission that drives me to the point of being emotional or romantic,” he says. “It’s vitally important that we do get this technology otherwise Europe has got no lithium supply.”

The European Commission has also stated their goal to end the sale of new petrol and diesel cars by 2035 to aid the environment. That being said, the majority of lithium extraction currently relies on power provided by environmentally damaging fossil fuels─a slight contradiction. 

Alex Keynes, from the Brussels-based lobby group Transport & Environment, is adamant that mining for lithium should be done sustainably. 

“Our view is that medium-to-long term, the majority of materials including lithium should come from efficient and clean recycling.

“Europe from a strategic point of view should be looking at securing its own supply of lithium.”

Despite growing competition from abroad, British Lithium Chairman, Roderick Smith, continues to place importance on the mining of lithium within the UK. 

“Imagine what the UK economy would look like if we lost our automotive industry,” Smith says. “The stakes are high for the UK.”

Smith expects the UK to compete with other European countries to secure a lithium battery plant in the near future.

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