While some of us will be celebrating V-Day catching up on The Last of Us and demolishing a supersized Cookie Time, two of the world’s largest gold miners have been getting cosy in the hopes they could soon exchange freshly minted golden rings. 💍
Last week Newmont Mining (NEM) got down on one knee and proposed to acquire Australian gold producer Newcrest Mining (ASX: NCM) for a huge US$17 billion. If Newcrest says yes, the gold mining industry could be in for a wedding of epic proportions. Newmont is the largest producer of gold in the world, ahead of Barrick Gold (GOLD) and Agnico Eagle Mines (AEM), while Newcrest was the seventh largest in the third quarter of 2022, producing 527,000 ounces of gold. 👑 According to Bloomberg, it marks the industry’s biggest ever gold mining deal.
But the proposal isn’t exactly Married at First Sight for the pair. When it comes to Newmont and Newcrest it’s more like a rekindling of old flames. Newcrest was originally spun off from Newmont more than 30 years ago. 💔
Newmont might have more gold than Gringotts, but to stay in business, miners need to keep finding new sources of gold to dig up. ⛏️ That’s a tricky job! So, instead, big companies can acquire another company to gain their reserves of gold. And with costs rising and grades of the metal declining, industry experts think there could be more consolidation to come. I ain't sayin’ they’re a gold digger, but… 👀
While Newmont and Newcrest work through their prenup with shareholders, interest in gold, and gold’s awkward love-child, copper, has been rising. According to the World Gold Council, demand for gold surged 18% in 2022, driven by ‘colossal’ central bank buying and more interest from retail investors as inflation took off. While the looming shortage for copper could last for years as demand grows but supply from South America hits a rocky patch. 🪨