Newmont Merger Would Create The World's Biggest Gold Miner

By Charles Kennedy of OilPrice

The board of Australia's Newcrest Mining has recommended the latest takeover offer of bigger sector player Newmont, which last month valued the target company at $19.5 billion.

"The latest offer is one that the board would be prepared to recommend subject to successful due diligence during the period," interim Newcrest chief executive Sherry Duhe said this week, as quoted by Bloomberg.

"This transaction would strengthen our position as the world's leading gold company by joining two of the sector's top senior gold producers and setting the new standard in safe, profitable and responsible mining," Newmont's chief executive TomPalmer said, as quoted by Reuters,  after the announcement of the latest offer.

Newmont first made a non-binding offer for Newcrest in February, which valued the company at $16.9 billion, but Newcrest rejected that as too low. Then the gold miner tried again, sweetening the offer.

If a deal does materialize, it will bring Newmont's gold output much higher—twice as high as the output of its rival, Barrick Gold, according to Reuters. It would also constitute the third-largest deal involving an Australian company as well as the third-largest M&A deal this year, the news outlet noted.

According to Bloomberg, the deal would also boost Newmont's presence in copper: the basic metal, which is essential for the energy transition, makes up a quarter of Newcrest's total output at present, but the company wants to boost that to 50% by 2030.

Copper is indispensable for wind and solar farm wiring and for EV engines. Yet supply of the metal is under threat because of insufficient new mining capacity coming on stream and falling ore grades.

Warnings of a looming copper shortage have been multiplying in recent months, but they have not yet made any forecasters budge on their expectations of an EV boom combined with a wind and solar boom.