Survey reveals 55% of mining and metals companies focused on growth in
VANCOUVER, Dec. 18, 2013 /CNW/ - Improved credit availability is set to
drive momentum in the mining and metals sector in the year ahead,
according to EY's Capital Confidence Barometer: Mining & metals sector. Fifty-five percent of companies are already focused on growth — compared
to 38% in 2012.
"Transactions in the mining and metals industry have dropped
considerably over the last year as companies struggled with capital
allocation and access to capital challenges," says Bruce Sprague, EY's
Canadian mining and metals leader. "Deal volume and value have fallen
36.9% and 58.1%, respectively, year over year in Canada alone. Now it
looks as though that tide may be turning."
Forty-seven percent of mining and metals companies believe credit
availability is improving in the sector — and 72% believe the global
economy is improving compared to 57% six months ago.
Investment decisions across the sector are currently focused on
deploying low-risk capital for growth. Expect companies to pursue M&A
that fits within their overall portfolio rather than just to achieve
"We're beginning to see companies slowly shift their focus back to
growth," says Sprague. "Just under half of survey respondents plan to
invest capital in the year ahead. And another 24% plan to pursue an
acquisition. But optimism isn't necessarily translating into the
closing of finance arrangements just yet."
While bank lending appears to be available to well-capitalized,
investment-grade borrowers, equity markets remain challenging, with
junior follow-on proceeds and IPO volumes at historic lows. This is
creating new opportunities for alternative finance and private capital
providers looking to invest.
"In the absence of traditional investor interest, we've seen a number of
new buyers come on the scene, including state-owned enterprises,
financial investors and commodity traders," says Sprague. "Together,
increased access to capital, improving credit availability and growing
investor confidence are setting the stage for M&A activity throughout
EY is a global leader in assurance, tax, transaction and advisory
services. The insights and quality services we deliver help build trust
and confidence in the capital markets and in economies the world over.
We develop outstanding leaders who team to deliver on our promises to
all of our stakeholders. In so doing, we play a critical role in
building a better working world for our people, for our clients and for
For more information, please visit ey.com/ca. Follow us on Twitter @EYCanada.
EY refers to the global organization and may refer to one or more of the
member firms of Ernst & Young Global Limited, each of which is a
separate legal entity. Ernst & Young Global Limited, a UK company
limited by guarantee, does not provide services to clients. For more
information about our organization, please visit ey.com.
SOURCE: EY (Ernst & Young)
For further information:
416 943 5497
604 648 3607
514 874 4308