Brazil's mining M&A on the rise

Logistics and infrastructure investments are set to drive a mergers and acquisition uptick in Brazil's mining sector, which recorded seven deals in the first half of the year compared to three in 1H20.

"The Brazilian mining sector is expanding its horizons with the Fiol railroad in Bahia, which has been concessioned to mining firm Bahia Mineração and which will help develop mining in the northeast state," said Paulo Guilherme Coimbra, an infrastructure, energy and natural resources partner at auditing and consulting firm KPMG.

“Another aspect is the development of new mines in the center-west of the country, linked to graphene, among other materials, that tend to see high demand from an economy based on clean energy.”

After last year's downturn fueled by pandemic uncertainty, Coimbra cites the rise in mining sector deals in H1, which were mostly linked to gold assets, according to KPMG data. "The second half will likely register a positive performance as well,” he told BNamericas. 

As the vaccination campaign advances, Brazil is on track for a 5% economic recovery this year compared to a 4.1% contraction last year. GDP growth is expected to spur more M&A activity.

Overall, 804 operations were recorded in Brazil in H1, up from 514 in the year-ago period, according to KPMG. 

Coimbra expects some market turbulence ahead of Brazil's presidential election in October 2022, which may delay some deals.

Meanwhile, mining firms are lining up project financing amid the country's improving public health conditions. Earlier this week, Denmark’s export credit agency and Finnish foreign credit entity Finnvera approved a US$146mn financing deal for Horizonte Minerals' Araguaia nickel project in Pará state.

The average number of daily deaths in Brazil fell to 518 in the last week, compared to 3,000 at the beginning of the year. Over 70mn Brazilians have taken both doses of the Covid-19 vaccine, representing 45% of the population over 18 years old, according to health authorities.