Mining tech shift: Look out below
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5 billion deals done since 2021 but motherlode still to be tapped
The flow of financing and acquisitions in the global mining and metals technology domain may have slowed, but strong underlying structural drivers remain evident in deals such as UK-based Spectris’ US$260 million buyout of SciAps.
"On trend is investment activity in many of the next generation of mining technology companies along with a number of funds researching the … new energy minerals and climate tech landscape to establish a thesis for up to $1 billion dedicated funds,” said Jason Price, director of leading sector financial advisor, Atrico.
About $430 million of transactions occurred in the first six months of this year involving mineral exploration, operations, processing and infrastructure technology enterprises.
Add deals such as Spectris-SciAps in the early part of July and the value of financing and mergers and acquisitions in mining/metals tech has gone past $8.5 billion since the start of 2021. That year was a watershed period for the sector with more than $3 billion of transactions.
Over 200 significant deals have been executed since the beginning of 2021.
The latest total for 3.5 years eclipses anything seen in any historical period for investment activity connected to mining software, sensors, control and automation systems, and communications and mineral processing tech.
It is sans material deals such as AspenTech’s cancelled $623 million purchase of Australian mining software company, Micromine (still in play), and doesn’t include activity in the nascent metal recycling space. That sector is now seeing transactions such as last year’s $540 million venture capital backing of US-based Ascend Elements, which added a further $162 million of equity financing at the start of this year.
Some see a future for miners as materials companies turning waste – 100 gigatonnes of mine waste being produced annually around the world, through to circular-economy regeneration of materials – into profits to supplement traditional extraction-based businesses.
Technology advances, said the International Energy Agency in its Global Critical Minerals Outlook 2024 report, were vital to accelerating the waste-to-energy transition.
“Recent studies show that total greenhouse gas emissions for manufacturing a nickel-rich lithium-ion battery cell can be around 28% lower if made from recycled materials rather than virgin minerals. Recycling could reduce primary mineral extraction and production requirements by 10-30%. A strong example of the environmental benefits comes from the aluminium industry, where recycling of post-consumer scrap has been shown to reduce emissions by 90% compared with primary aluminium,” the IEA report said.
Add minerals/metals recycling technology companies to the mining-tech financing and M&A conversation and well over $10 billion of transactions have been logged since 2021.
Early days
Significantly, mining is still seen as a laggard when it comes to digitalisation and even mobile autonomy. Despite having hubs of advanced heavy-equipment fleet automation, such as in Western Australia’s Pilbara region, overall market penetration of the technology is low. Automation of the systems behind mobile equipment and mining value chains is very much a work in progress.
“'Smart mining' is being projected as a market that could be worth $40-to-$50 billion in 10 years. It’s probably now worth a quarter of that. We’ve got gigabytes of data coming in. How do we get value out of it?” 30-year industry veteran, Jason Pearce, said at a recent Hexagon Mining event in Western Australia.
Swedish software company Hexagon has been one of the most active investors in mining tech – through acquisitions – over the past decade.
“We [Hexagon Mining] are a conglomerate of acquisitions. We’ve got a lot of impetus [and] a lot of technology. We see technology transforming other industries [Industry 4.0]. We’ve got all the technology now in mining, but we’re not using it yet.” said Pearce, the division’s APAC region service and support director.
Hexagon and Canada’s Constellation Software (two deals in H1) continue to be among the busiest assemblers of mining/metals technology stacks, along with original equipment manufacturers such as Epiroc, Sandvik, Komatsu and Hitachi Construction Machinery, and Australia’s Orica and IMDEX. Integration steps are formative.
“It’s evident that the major acquirers are consuming their prior large deals and therefore remain less aggressive [buyers] at this stage. [But] acquirers remain interested in further acquisitions,” said Atrico’s Price.
It is still early days, too, for venture capital and private equity funding of metals and mining tech with the latter seen to be dipping a collective toe in the pond via deals such as Accel-KKR’s acquisition of Australia’s K2fly and even American Industrial Partners’ platform purchase of Boart Longyear. Boart has dominant mining services and product arms but also a budding “orebody knowledge” technology business.
Price says Atrico is seeing more interest in the space from buy and hold funds and more patient capital becoming engaged.
“Over the next five years we see the mining industry poised to further capitalise on digital innovations such as AI-driven predictive maintenance, autonomous mining systems, and advanced data analytics. Embracing these technologies offers a transformative opportunity to further accelerate the streamlining of operations, mitigate risks and meet evolving environmental and regulatory demands effectively,” Nadia Shaikh-Naeem, vice president of programs at Canadian government-backed investment agency, DIGITAL
DIGITAL is a co-investor in Novamera, Ideon and a University of British Columbia Mining Microbiome Analytics Platform (M-MAP) backed by the likes of Teck Resources and Rio Tinto. Mining/metals tech has attracted about 2% of the plus-C$630 million deployed by DIGITAL over the past five years or so.
“The majority of DIGITAL’s investment history and focus is actually on healthcare, which offers interesting comparisons to our emerging mining portfolio. The mining sector and healthcare have both advanced digitally yet their perceived maturity and opportunities differ,” Shaikh-Naeem said.
In its report outlining an estimated $800 billion base-case investment in mines needed over the next 10 years or so to supply critical minerals for world energy, transport and urban transition, the IEA said technology required to re-energise mining and metals operations, increase efficiency, cut operating footprints and produce more critical minerals was ultimately pivotal.
‘Old mining’ was challenged: mines were getting deeper and more energy intensive; too much harmful waste was being produced; technical expertise was disappearing; and new mines were taking too long to develop. ‘New mining’ would be more agile; more flexible; more appealing. Technology would be part of its DNA.
But VC investment in the 'critical mineral sector' is emergent.
It had grown from virtually zero in 2017/2018 to more than $1.4 billion in 2023, with significant growth in battery recycling offsetting reductions in mining and refining start-ups, the IEA said.
Erik Belz, president and chief operating officer at San Francisco hedge fund, Engine No. 1, says technological innovation is key to drawing some of the “mountains of [private equity] money raised for, quote, unquote, energy transition funds” back to traditional natural resource value chains (including oil, gas and mining).
“We’re always going to need energy. The forms may shift and that shift will come by driving technology...The [consumer] tech industry has led [capital markets] growth over the past 10 years...I think the industries that will lead over the next 10 years will be fundamentally different.”
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