Blast Furnace: An employee places a gold "button" in a furnace for later shaping into an ingot at a Newmont Minings gold mining operation.
Photo: Rick Wilking / REUTERS
One of the largest takeovers in many years is looming on the global gold market.
According to reports in the "Wall Street Journal" and the "Financial Times", the US gold producer Newmont in the US state of Colorado intends to take over Australia's Newcrest for 17 billion dollars (16 billion euros).
It is now the second offer, the first had Newcrest rejected as too low.
The Australian group said on Monday that it would examine the new offer.
Newcrest owns mines in Australia, Canada and Papua New Guinea.
After the share price had almost halved between April and September last year, the Australians have once again been targeted by competitors.
With annual production of the equivalent of 170 tons and reserves of around 2630 tons, Newmont is one of the largest gold producers in the world.
In 2019, Newmont acquired Canadian competitor Goldcorp for around $10 billion.
In the same year, Newmont also formed a joint venture with Canadian rival Barrick Gold after the two failed to agree on a merger.
Difficult search for new gold deposits
The recent bid for Newcrest highlights major gold producers' efforts to merge to increase their gold reserves, lower costs and generate more returns for their shareholders.
Gold mine operators have had problems increasing their reserves for years, as many mines hardly have any easily accessible gold deposits and exploration has only unearthed a few large deposits.
The following figures show how difficult the search for new, worthwhile deposits is: Of a total of 341 large deposits discovered between 1990 and 2021, only 28 were found in the past decade and contained only 6 percent of the gold discovered since 1990, reports S&P Global Market Intelligence.
At the same time, gold producers are grappling with higher costs from increased wages and skyrocketing energy prices.
Newmont Gold Bars: The group produces approximately 170 tons of gold annually
Photo: Carla Gottgens/Bloomberg via Getty Images
According to experts, rising costs, the lack of new, productive deposits and finally the volatility of the gold price due to sharply increased interest rates mean that more and more gold is considering mergers in order to grow.
In recent months, the price of gold has picked up significantly again as markets expect the US Federal Reserve to slow down its rate hikes, making the precious metal more attractive to investors.
Higher interest rates, on the other hand, usually dampen gold demand.
Analysts do not rule out a bidding war
According to Newcrest, Newmont's latest offer represents a 21 percent premium to the Feb. 3 closing price.
Newcrest shares closed a good 10 percent higher in Australia on Monday.
Measured against the closing price on Friday, the reaction on the stock exchange was still quite restrained.
According to analysts, a bidding war for Newcrest could nevertheless unfold, since competitors such as the Canada-based groups Barrick Gold and Agnico Eagle are also aiming for a consolidation of the market, reports the "Financial Times".
However, the acquisition would reunite the two companies after almost a quarter of a century: Melbourne-based Newcrest was founded as the Australian arm of Newmont in the 1960s and was spun off from BHP in 1990 after merging with the historic gold assets.
The merger would bring four of Australia's top five gold mines under Newmont's control and would require Australian government approval, it said.