U.S. company Newmont, already the world's largest gold miner by output, has made a bid to buy all the shares of its Australian rival Newcrest, valuing the company at nearly 24 billion Australian dollars (US$17 billion). The transaction would be one of the largest acquisitions in the gold mining sector.

This potential acquisition shows that producers are trying to make deals to strengthen their gold reserves, reduce costs and increase returns to shareholders. For example, in 2019, Newmont bought Canadian gold producer Goldcorp Inc. in a deal worth US$10 billion. In the same year, Newmont and rival Barrick Gold Corp. formed a joint venture in Nevada to cut costs after an earlier offer by Barrick to buy Newmont was rejected.

Gold miners have found it difficult for several years to find reserves in low-risk countries because many mines are running out of gold that is readily available and exploration campaigns are revealing few large deposits. Of the 341 large deposits discovered between 1990 and 2021, only 28 have been found in the last decade and they contained only 6% of the gold discovered since 1990. Gold producers are also facing higher costs due to wage increases and skyrocketing energy prices.

Newmont said it will offer 0.380 of its own shares for each Newcrest share. This follows an earlier offer by a US company that valued each Newcrest share at 0.363 of a Newmont share, which the Newcrest directors rejected as too low. The combined entity would therefore be owned 30% by Newcrest shareholders and 70% by Newmont. Gold prices have risen in recent months on expectations that a slowing economy will prompt the Federal Reserve to slow the pace of interest rate hikes, making the precious metal more attractive to investors.