A recent hot spot in the gold market is a wave of mergers and acquisitions among major mining companies. However, this week, it is reported that Barrick, the world's largest gold producer, has failed to acquire Newmont.
After the fall in commodity prices in 2011, the majorbankAnd investors began to anticipate that in the gold mining industry, those small and medium-sized enterprises would choose to merge.
Last year Barrick acquired gold producer Randgold, and in January this year, Newmont acquired gold producer Goldcorp.
But the news that Barrick's acquisition of Newmont's defeat this week seems to have poured a cold water on the market. More importantly, other companies in the entire gold production industry have not joined this trend.
Market participants believe that this is because many mining companies are not willing to sell when the stock price is low today, which will be a bad choice for management.
Tocqueville Asset ManagementfundManager Douglas B. Groh said that it is getting harder and harder for companies to get capital, and some companies are difficult to attract attention.
Last year, the gold mining industry traded about $12.4 billion, half of the peak in 2010. The entire mining industry traded a total of 59.6 billion US dollars, about 55% lower than the peak in 2011.
Among them, some gold mining companies have difficulty finding sellers. For example, Roxgold, which focuses on Africa, has been trying to find buyers, but has not been able to sell them.
In addition, Kinross had previously tried to sell 90% of its gold mine in Ghana, Chirano, but it has not been able to reach an agreement more than a year later.
Therefore, after the previous two mergers, the so-called merger boom will not really come.
The performance of the entire gold production industry in the past mergers has not been very good. Before the burst of the commodity bubble in 2011, gold producers spent too much, so investors were far away.
In 2016, PricewaterhouseCoopers said that in the past five years, major miners totaled $200 billion in total purchases.
In addition, for managers of these gold mining companies, mergers also mean risks. According to statistics, the annual salary of CEOs of Canadian mining companies in 2017 is generally between 200,000 Canadian dollars and 400,000 Canadian dollars, which is the top level in most industries in Canada.
For example, the CEO of Yamana Gold took a total of $60 million in salary between 2010 and 2016, while the share price of the mining company fell by 70%.
Joe Foster of VanEck International Investors Gold Fund said that there are too many gold mining companies in the hands of poor managers, and that these mining companies need to be transferred to better managers.
As investors are interested, gold producers have to rely on their own stability to try to attract more attraction.
There are 1,184 mining companies listed in Canada alone, with a total market capitalization of $271 billion.
In addition, the World Gold Council expects gold mine production to begin to decline, with a production of 3,252 tons in 2016 and a decline to 3,244 tons in 2018. This is also bad news for gold producers.
Worse, the newly discovered gold mines are getting less and less.
In general, many small and medium-sized enterprises in the mining industry are seeking mergers, but in the overall environment, they will still be in a more difficult state.
(Article source: Gold headline)