According to the latest “Mergers and Acquisitions and Financing in the Mining and Metals Industry” report released by EY, global M&A activity in the mining and metals sector grew by 15% year-on-year in 2017, reaching US$51 billion—the highest level of completed deals since 2013. However, the financial performance of the mining and metals industry was less than satisfactory, with overall deal volume declining by 6% compared to the previous year. China continues to rank first globally in M&A transactions, as the domestic steel and coal industries undergo extensive restructuring, driving robust M&A activity. Regarding M&A trends, the report highlights several key characteristics that defined global M&A deals in the mining and metals sector in 2017.

　　First, the value of M&A deals has increased significantly, reaching the highest level since 2013. However, although the drivers behind these deals have shifted from spin-offs to strategic concentration, driving a 15% year-on-year increase in deal value to $51 billion, the number of deals declined by 6% year-on-year.

　　Second, China remains the primary driver of M&A activity, leading in deal volume both as the acquirer (US$18.7 billion, accounting for 36.5%) and as the target company (US$13.6 billion, accounting for 26.6%). This is largely due to domestic M&A deals in the steel and aluminum sectors, aimed at consolidating the industry and enhancing overall efficiency in the metals sector.

　　Third, portfolio management is a key driving factor. The restructuring of portfolios in the minerals and metals industry is particularly prominent, as diversified producers seek to divest assets that are no longer considered core businesses and thereby free up capital.

　　Fourth, industry participants completed nearly 70% of the total transaction volume in 2017. Meanwhile, financial investors have also begun to return to the market, accounting for 22.4% of last year’s total transaction volume, with a transaction value reaching US$9.5 billion.

　　Fifth, commodity markets are showing diverging trends, with coal and steel dominating trading activity. In 2017, coal trading volume surged by 156% to reach US$8.5 billion, driven by several large companies proactively divesting their thermal coal assets while shifting toward renewable energy sources. Steel trading volume, meanwhile, doubled to US$13.3 billion. Looking ahead to M&A prospects in 2018, an EY report highlights that, as balance sheets across the energy and mining sectors remain robust, mining companies are returning to investment-driven strategies, focusing on building asset portfolios to deliver sustainable shareholder returns. Consequently, this year, key drivers of M&A activity will include the addition of promising new projects, synergistic approaches to boosting production, and the next wave of demand for minerals. Among these, transactions involving lithium, copper, and cobalt will warrant particular attention. At the same time, active investors will significantly influence mining companies’ operational and investment strategies, impacting both the selection of commodity portfolios and trading volumes. On the financing front, the strong performance of mining and metals companies reflects the sustained resilience of commodity prices over the past period, thereby improving access to capital. In 2017, mining and metals companies continued to tightly control production expenditures, maintain capital levels, and minimize operating costs, ensuring that most firms maintained stable financial positions. Key financing efforts have been concentrated on short-term needs, such as working capital and refinancing requirements. Moreover, demand for other financing channels—including upstream and downstream supply chains, royalties, and underwriting agreements—tapered off in 2017, with most industry participants opting for more flexible traditional financial instruments. Despite a slowdown in credit conditions for mining and metals companies, demand for debt instruments remained steady throughout 2017. Looking ahead to 2018, the EY report suggests that as companies shift their focus from reducing debt to creating shareholder value, their borrowing needs will adjust accordingly. With improved metal demand driving higher productivity, many companies may require additional working capital, while others might seek to refinance high-cost financial instruments acquired during periods of tight liquidity. The industry’s overall return on investment will become the primary driver behind the issuance of new bonds in the near term. In 2018, the expansion of metal projects related to battery technologies is expected to further boost financing demand.