LATIN AMERICA STATISTICAL REVIEW
Rich veins of growth - Mining drives dealflow
2012: a statistical review
• Mining is the engine driving growth in most countries of the region, and making up for the lackluster or faltering performance of other sectors. It is particularly strong in the key jurisdictions of Argentina, Chile, Colombia, Mex- ico, and Peru and no less so in smaller but vital economies such as Bolivia and Panama;
• Even where mining has trended downward slightly over the past year—in Brazil—it is still nearly a billion-dollar industry, and the potential for higher deal volume exists with tax and regulatory reform;
• Oil and gas exploration and development were strongest in Venezuela, with a $751 million deal volume.
Metal & steel- Chart A: Project Finance 2012 ($ million) Natural Resources (15,747)
Oil & gas- diversified (2,545)
Mining-General (6,113)
processing (1,192)
Metal & steel- products (839)
(Total - $24.5 billion) Commercial/ Industrial (4,124)
Infrastructure (7,583)
(Total - $42.34 billion)
Transactional statistics provided by Dealogic for the energy, mining and infrastructure sectors highlight the great diversity of economies and po- litical regimes in Latin America—from the highly sophisticated to the primitive, from the liberal democracy to the dictatorship. Talking to in-house counsel at international corporations gives one a sense of wide- spread frustration over efforts to harness the nearly infinite promise of the region’s resources, a promise hampered by a profusion of unneces- sary and outdated regulations, whether they limit what equipment can be imported for offshore drilling (in Brazil) or how quickly precious metals miners can obtain permits to get to work (in Colombia). Given the impossibility of generalizing, the most sensible approach to analyz- ing deal flow over the last few years is to survey the region and look at how different sectors have performed on a country-by-country basis.
Argentina Argentina’s mining, oil and gas, metal and steel and utility and energy targeted M&A markets showed a sharp increase in 2012 generating $8.4 billion from 35 deals compared to $3.4 billion from 52 deals in 2011. The oil and gas industry raked in $8.2 billion from 18 deals in 2012. The latter was driven by exploration and development, which brought in $6.4 billion from eight deals. Last year, the general mining industry was the most active with 13 deals worth $93 million. The sec- tor was driven by two major deals in the first half of the year. Allied Gold mining was targeted for $619 million. The company engages in the exploration, development and production of gold projects. Roy Hill Holdings. was also targeted during 2012 for $1.5 billion with the in-
4 ENERGY & INFRASTRUCTURE | LATIN AMERICA 2013
Energy/Power (14,888)
tention to produce 55 million tons of iron ore. But during the same year, the utility and energy industry trended downward. The 12 months in 2012 recorded only three deals worth $22 million. Over the same period in 2011, eight deals worth $168 million were secured. The metal and steel industry was quiet in 2012 and no deals were finalised. The industry peaked in 2005 after a $448 million deal. According to a February 2013 report by Global Business Reports
published in the Engineering & Mining Journal, mining has grown re- markably over the last decade and Argentina is expected to “see the be- ginning of a new era.” Argentina’s Secretary of Mining Jorge Mayoral says that we are at “just the tip of the iceberg of a virtuous cycle for mining in the country.”
Brazil Although they recorded the lowest numbers since 2010, the Brazilian mining, oil and gas, metal and steel, and utility and energy targeted M&A industries were relatively active in 2012. The industries had 115 deals worth $13.6 billion. Electric power secured $6.49 billion with 31 deals during 2012. The activity is consistent with the year before, when the industry secured 33 deals worth a total of $6.76 billion. Gen- eral mining, however, continued its downward trend in 2012 with only 32 deals worth $823 million. In 2010 and 2011, the industry saw 43 deals worth $5.71 billion and 46 deals worth $2.92 billion respectively. Last year, the country’s mining sector was driven by some major deals like B&A Mineração’s plans to spend approximately $520 million on investments to explore mining opportunities in Africa and Latin Amer- ica. During the same period, South Africa’s AngloGold acquired a 50% participation in the gold mine of Crixás, the State of Goiás, for $220 million. After a flat-lined 2011, metal and steel products accounted for six deals worth $1.3 billion in 2012.
Central America The M&A market in Costa Rica has been consistently quiet. General mining was the only sector that recorded any activity during 2012, with one deal valued at $10 million. In El Salvador after a 2007 high of $180 million, the M&A market
Chart B: Syndicated Loans 2012: Borrowers ($ million)
Utility & energy-
Oil & gas-field equipment
& services (385) Oil & gas-
exploration & development (4,134)
diversified (408)
Utility & energy- gas
(1,044)
Utility & energy- hydroelectric power (1,288)
Utility & energy- water supply (123)
Metal & steel- distributors (1,485)
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