Growing Private Equity Investments in the EU’s Mining Sector

🌱 What investments are flowing into the EU?

According to S&P Global, the amount of “private equity and venture capital investments” going towards the EU's mining and metals industry are increasing. From January to October 2024, the “private equity deal value in metals and mining companies amounted to $4.19 billion”. This is notably “nearly double the $2.23 billion amassed in 2023 and more than seven times the $580 million reached in 2022”.

🌱 How much funding is going into steel?

According to S&P Global, “[t]he largest private equity transactions in the EU mining sector are funding rounds for steel, diversified mining and aluminum companies”. In the largest deal made in 2024, a group of investors – including Microsoft Corp.'s M12 and Just Climate LLP – invested $4.1 billion in the Swedish steelmaker, H2GS AB. In the second-largest deal of 2024, Bpifrance Investissement SAS led a $37.2 million investment in the French mining company, Vulkam SAS – which specializes in the mining of critical and strategic materials (such as copper, hafnium, and nickel). Under the third-largest deal of 2024, Otium Capital invested $8.6 million in the French-headquartered alumina refining company, IB2 SAS.

🌱 What role does the EU’s Critical Raw Materials Act play?

The EU’s Critical Raw Materials Act (CRMA) came into force on 23 May 2024. It sets out 51 materials that are deemed as “strategic” or “critical” for the EU. The act also puts into place specific minimum targets for the EU’s annual consumption of the listed materials. By 2030, 10% must be locally extracted, 40% must be processed within the EU, and 25% must come from recycling. According to S&P Global, the introduction of the CRMA has led to a rapid increase in the deployment of private capital into the mining sector since 2023. The act has created public financing for projects and other mechanisms and incentives that mining companies and private investors can benefit from. This has led to the growth of the sector. It has also reduced the dependency of the EU on Chinese material imports.

🌱 What is happening to investments in China?

According to S&P Global, “private equity-backed investments in China's metals and mining sector have plunged to less than $100 million”. From January to October 2024, $50 million were invested in China's mining industry. This was notably only “about 7.7% of the [total] $650 million the [Chinese] sector received in 2023 and only 4.5% of the $1.10 billion amassed in 2022”. The decrease in investments is a part of the larger three-year decline in US private capital deployments into China.