A global leader in the mining technology corporate advisory field says the M&A cupboard has been pretty much cleared of front-line targets by two years of heavy buying. However, a new wave of mining tech scale-ups has formed.
Australian firm Atrico has worked with a number of the leading companies that have been acquired in recent times. Its founders have been active in the mining and energy technology advisory arena for more than 20 years, guiding more than 250 companies on growth, strategy and M&A. While this has mainly involved small-to-mid-sized firms, Atrico advised on the A$900 million acquisition of Micromine by US-based AspenTech, one of the biggest deals in the mining tech space in the past two years.
It is increasingly being sought out by larger groups given its unmatched knowledge of the mining tech deal space.
Circa-US$6 billion of mining tech acquisitions and financing in the past two years has seen many mature software, automation and robotics, sensor, communication and control system businesses snapped up by large mining equipment manufacturers, bigger tech firms and mining service groups.
The period has also seen a rising post-COVID global tide of cleantech funding spill into mining and metals, putting some mineral extraction, power system and exploration tech firms in a position to scale quickly.
Atrico says the new funding, including injections from mining and non-mining venture capital groups and (limited so far) investment by larger private equity firms, has been a welcome shot in the arm for a sector largely shunned by such actors in the past.
It is accelerating sales and marketing efforts, but most of the emerging mining tech firms are “not at scale market penetration rates yet”, according to Atrico managing director, Ivan Gustavino.
“Many of the deals we’ve seen in the last two years involved companies that had significant market penetration,” he said.
“The others don’t have it.
“So there’s a gap there.
“There will be deals done, but they’re not going to be as easy with all the really good things being snaffled. Filling that pipeline up is going to take some time.
“The types of deals we think will happen will be more the tech tuck-ins where the target has got established distribution or interesting technology.
“The acquirer will bring the market to the newcomer and they’ll get the deal done because the buyer will want to take supply early. You either get in early or you wait for companies to scale. Some will want to get in early.
“We’ll also see more companies doing partial investments in small firms.
“So there will be a mix of deal structures coming in.
“Venture capital is also coming in to feed the growth ambitions of some of those companies.
“There are at least five US groups currently looking for mining tech investments in Australia. That’s not something we’ve heard of before. I think we will see more of that in the next two years.
“We are definitely seeing more broader investor interest in the space given the compelling mining industry narrative around increasing supply of critical minerals while reducing operational waste, carbon footprints and negative ESG outcomes.
“And that includes mining and metals customers taking a deeper interest in the industry’s upstream supply chains.”
Atrico’s head of strategic growth, Jason Price, says a number of companies that have received significant – by sector standards – equity funding injections in the past 2-3 years have become reasonably well known.
“There are companies that have been start-ups for the last three-to-four years that nobody can see right now,” he says.
“They’ve got five-to-10 sites, in their backyard.
“They’ll start popping up as they come out of limited release.
“Some of those coming out of South America look pretty good.
“There are a couple in North America that have massive growth written all over them.
“There are also a few potential billion-dollar companies in the latest wave of start-ups. There are only a few of those that are really visible at the moment.”
Atrico director Kheong Chee says incumbent mining suppliers – equipment makers aiming to build $500 million to $1 billion a year digital technology arms, mining software vendors, and IT groups with mining and metals exposure – are expected to remain active acquirers.
“We’ve seen a real drive come from mining groups wanting to deal with fewer suppliers,” he says.
“That’s certainly created some of the impetus for the likes of Epiroc, Sandvik, Imdex, Orica, and others to scale their technology businesses, so they can leverage their distribution and generate more sustainable revenues and growth.
“It also simplifies the buying process for the customer.
“It’s really simplifying the whole world for the mining companies.
“That’s been a massive driver for what we have seen in mining tech M&A in the last five years.”
