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FURTHER concentration of the mining sector through mergers and acquisitions is not only inevitable but also desirable. Raw Materials Group’s Magnus Ericsson told a recent convention: "We need stronger companies to be able to do the intensive exploration, do the research and development that I see is necessary, and also to be able to keep their profits up and share them with the host countries and people." His statement is based on the fact that the top 150 mining houses make up less than 4% of the number of industry players but account for 80% of global metals output. As the influence increases due to increased merger and acquisition activity, Magnus Ericsson says there will be an increased need for competition watchdogs. "We will see more state intervention and I think the industry has to prepare itself for that." He says it also means the middle ground in the industry is being squeezed. "You have the large companies on one hand, juniors on the other, but the middle sized companies are being squeezed out of the equation." The mining field is also changing with emerging markets and companies entering the race and changing the playing field. China and India are leading the charge but have only just begun. The desire for resources in these developing nations is continuing unabated and it is fairly safe to say that metals are playing a major role in driving economic development in all types of economies. The developing nations are seeking the resources and in many cases the developed nations are supplying them. Not so long ago metals were not considered to be drivers in economic development but that is certainly not the case now. This has been a significant change in thinking. This change places the resource-rich countries in a strong position to service the developing nations but makes Europe and Japan in particular more vulnerable to being edged out. It also means that the larger mining companies are well placed to continue to grow, particularly through mergers and acquisitions of smaller and mid-size players with key resource bases, as well as with their major competitors.
Article Source: http://articles-mart.com
Yolanda Torrisi - Managing Editor and Director of The ASIA Miner, the international online mining magazine and Mining News service and hosts of leading Mining Conferences in Asia.
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