In the rapidly evolving landscape of energy and mining, the lines that once separated these sectors are increasingly blurred. The Lexpert Special Edition: Energy and Mining delves into the complex interplay between these industries, shedding light on the challenges, opportunities, and regulatory shifts that are shaping the future. As global priorities shift toward decarbonization and sustainability, the dynamics of mergers and acquisitions (M&A) within these sectors are experiencing significant transformations.
The evolving dynamics of M&A in mining and energy
Greg McNab of Dentons Canada LLP highlights the dramatic changes over the past two decades, noting, “Everything accelerated – from a gradual transition to a full-on push to revolutionize everything, on both the mining side and the energy side.” With critical minerals at the heart of the energy transition, traditional economic models for dealmaking have become volatile and uncertain.
John Wilkin of Blake, Cassels & Graydon LLP emphasizes the broad spectrum of deal activity, noting that it spans various commodities, from precious metals to rare earth elements. This diversity is reshaping the market, as illustrated by major deals like Newmont’s acquisition of Newcrest and Glencore’s purchase of Teck’s coal assets. It’s not focused on one or two commodities but a relatively broad representation of the sector, says Wilkin.
The impact of regulatory changes on foreign investment
New Canadian regulations are also impacting M&A, particularly in the mining sector. Fred Pletcher of Borden Ladner Gervais LLP points out that recent policies aimed at protecting national security and critical mineral resources have “put a chill on the market.” These measures, designed to limit foreign ownership, particularly from state-owned enterprises, are reshaping how global companies invest in Canada’s energy and mining sectors.
However, lawyers say Canada's focus on the critical minerals is showing progress. “Canada’s Critical Minerals Strategy has made some real progress and is still an opportunity and a well-intended strategy document," says Michael Pickersgill at Torys LLP.
Indigenous involvement in projects
Indigenous involvement in energy projects has become increasingly vital. Rob Blackstein of BLG notes the growing role of Indigenous communities in M&A, with many now taking equity stakes in projects. “The involvement of Indigenous communities has grown exponentially in energy projects and will continue to grow,” he says.
In the mining sector, Sarah Powell of Davies Ward Phillips & Vineberg LLP emphasizes the need for strong, long-term relationships with Indigenous communities. “Our clients are very sophisticated in understanding that they need to have deep relationships with any Indigenous community that is going to be impacted by a project,” says Powell. These relationships are essential for maintaining the social license to operate.
Looking ahead: strategic adaptations in a shifting landscape
As energy and mining continue to converge, the future will be defined by strategic adaptations and forward-thinking approaches. The complexities of M&A, from fluctuating valuations to regulatory challenges, are forcing companies to rethink their strategies. However, with strong partnerships, particularly with Indigenous communities, and a focus on sustainability, there remains significant potential for growth and innovation in these sectors.
This edition profiles the top-ranked lawyers who are leading the way in navigating this complex and evolving landscape, offering insights into how they are shaping the future of Canadian industry.