The 2015 commodity price collapse across most commodities in the mining sector (other than gold) left very few companies untouched. A pressing need to undertake balance sheet repair driven by ballooning debt accumulated during the mining boom drove major asset sales, spending cuts and dividend suspensions across the industry. Even the major mining houses underwent emergency capital injections. The financial distress fed through to industry service providers as mining companies looked for every avenue to cut production costs to meet the massive fall in commodity prices.
Fast forward to 2017 and there has been a spectacular recovery across the industry driven by an extraordinary and almost unanimously unpredicted recovery in commodity prices in late 2016, particularly in iron ore, coal, copper, zinc and other base metals.
And so it seems the industry has entered a new phase of the cycle, but with new uncertainties driving volatility and companies and investors not sufficiently confident to return to growth as a strategy. Meanwhile the supply of quality assets available to bidders has fallen off as most of the sales complete and sellers withdraw assets from the market due to reduced balance sheet pressures and improved economics.
The principal uncertainties are the direction of China and the impact of a Trump led United States and the impact of Brexit. Add to this list the ongoing aggressive acts of resource nationalism (as witnessed in Indonesia) and of environmental activism (as witnessed in the Philippines).
So the 2017 market is much more buoyant and filled with opportunity. There is hope that miners now have flexibility to pivot from balance sheet repair to invest in growth. We are already seeing evidence of an uptick in a variety of financings, growth M&A and greenfield project development. But the uncertainties that continue to overhang the sector will prevent any return to boom times for the moment. 2017 is a year for a tentative return to form, subdued by the uncertainties created by a complex matrix of economic and political factors playing out globally.
Our metals and mining lawyers work exclusively on deals in the mining and metals industry and have done for decades, at White & Case and in-house at major, mid-cap and junior mining companies.
We understand the twists and turns of the sector. We know and track those involved, the assets, the market trends and commodity fundamentals. And we understand the technical side of the business, the underlying chemistry and geology and how mining works operationally, from pit-to-port.
Our global mining and metals team is shaped and reshaped to meet the needs of the industry. This means we can advise clients on their activities at all points in the cycle and bring an industry-focused approach to each transaction.
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AWARDS & RECOGNITION
"They have a very strong, full-service team that works seamlessly across practice groups and geographies."
"They have a very commercial approach. They always see the legal angle but with a commercial side too."
Chambers Energy & Natural Resources, Mining: International – 2016
Vale's project development and financing of Nacala
Major Brazilian miner in its port and rail infrastructure in Mozambique and Malawi linking up the Moatize coal mine.
Essar Steel chapter 11
Global steel company on its chapter 11 bankruptcy filing in the United States.
Gabriel Resources arbitration against Romania
Canadian miner on its filing for arbitration against Romania in the stalled development of its majority owned Rosia Montana gold project.
Compagnie des Bauxites de Guinée expansion financing
Lenders (BNP Paribas, Crédit Agricole, IFC, ING, Natixis, OPIC, Société Générale and two Guinean banks, with the commercial bank tranche being covered by UFK) on the multi-hundred million dollar financing of the CBG Sangaredi bauxite mine expansion in the Republic of Guinea.
Eurofer steel protections
European Steel Association on anti-dumping/trade issues in the steel market – fundamental to the survival of the European steel sector.
Kazakhstan's subsoil use legislation
Kazakhstan's Ministry for Investments and Development in drafting the new subsoil use framework.
MMG-led consortium's US$7+ billion acquisition and financing of Las Bambas
Chinese consortium's acquisition and financing of the Peruvian copper asset from Glencore PLC.