Are Kazakhstan, Russia and America the Future?

One interesting stat from the recently-released mining M&A report from PwC. Top destinations for deals during the first half of 2013 were Kazakhstan (27% of total deal value), Russia (23%) and… America, at 10% of total deal value.

The former two nations largely made the list by virtue of a few, billion-dollar transactions. Billionaire Mikhail Prokhorov selling his 37.8% stake in Polyus Gold–and some locally-originated deals in Kazakhstan.

But America is a surprise. The 3rd place finish wasn’t padded by big deals. The largest mining transaction completed in the U.S. during the period was only $435 million–the buy-out of coal firm Canyon Fuel Company by Bowie Resources Partners.

This suggests interest in minerals may be returning to a nation generally viewed as being mining-unfriendly.

Such a shift could make sense for the mining industry. We’ve recently seen high-profile disputes over mining assets in developing nations, such as Ecuador’s repossession of Kinross Gold’s Fruta del Norte project. This might have mining executives looking for proven safe jurisdictions.

The move could also be driven by services. Bottle-necking of supply chains has been intense for miners lately. And being in an out-of-the-way locale makes getting products and services even more difficult. Operating in a well-developed industrial nation like America could ease these pressures.

Or maybe it’s just that America is becoming (slightly) more welcoming to the “dirty” business of mining. With unemployment high, there have been several showings of support for job-creating mining projects around the country.

If so, the opportunity could be significant. America has well-identified mineral wealth. But in many states this has gone under-developed, largely due to social and political pressures.

The re-opening of American geology would be an odd kind of renaissance. But it could be that the next big thing will be going back to the old big things.

Here’s to rediscovery,

Dave Forest

dforest@piercepoints.com / @piercepoints / Facebook

 

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