The world’s two largest gold miners, Barrick and Newmont, have been in talks to merge over the past week, highlighting the difficult environment for miners since shares started falling in 2011. A merger would create a $30bn super-company likely to clear antitrust hurdles because it would only account for 13% of global mine production, well below the 35% threshold Canadian antitrust regulators care about.
At the same time, Goldcorp, Yamana and Agnico-Eagles are all looking to takeover Osisko Mining Corp, a Canadian junior miner. With gold prices down, the margins for these miners continue to be depressed, leaving M&A as one of the few avenues to pursue growth. It also highlights the value of mining companies that operate in developed countries where labor conflict is unlikely to disturb production.