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Mining sector next growth phase to come from M&A - Jefferies

Mining News - Published on Tue, 22 May 2018

Image Source: Forbes
Seeking Alpha reported that mining companies have strengthened their balance sheets and started to give back capital to shareholders; based on history, Jefferies analyst Christopher LaFemina said that the sector should be entering a growth phase, which could come from M&A. The analyst said that companies within his global mining coverage will increase production by just 3% in total over 2018-21, while demand for most commodities should grow by at least 2%/year over the period, leading to potential market deficits in most mined commodities.

Industry’s reluctance to invest in new supply is "clearly bullish," LaFemina said that, as it will result in continued strong free cash flow, greater capital returns and eventual focus on M&A rather than organic growth.

Most likely buyers are Rio Tinto, BHP Billiton, Vale and South32, which have limited organic growth, LaFemina says, adding that Lundin Mining’s bid for Nevsun could be the start of a phase of copper M&A.

Mining sector next growth phase to come from M&A - Jefferies

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Posted By : Rabi Wangkhem on Tue, 22 May 2018
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