While consolidation among the large-cap mining groups has grabbed all the recent headlines, the junior miners on Aim have motored ahead relatively unnoticed. The miners have been the best performing sector on the main market over the past three years and this success has been mirrored on Aim. The Mining EYe index of the top 20 Aim miners - which is produced by the corporate finance team at Ernst & Young - rose by an impressive 33pc in the year to date.
By comparison, the FTSE Aim 100 index has ticked up just 4pc since January. From the global giants such as BHP Billiton to the Aim minnows with one mine, the driving force is the same: global economic growth. China and India, as well as other rapidly-developing countries such as Brazil and Russia, need raw materials to build the bridges, skyscrapers and cars that are vital for their growth.
This increasing demand has been forcing metal prices, which were comparatively depressed for a number of years, higher. Somewhat surprisingly given this backdrop, the number of new Aim listings halved compared with last year, with just 25 new mining companies joining the market. But the Aim miners had their best year ever in terms of secondary fund-raising, with a record 1.9bn raised by the end of October.
Michael Lynch-Bell, head of mining at Ernst & Young, remains optimistic about the sector, which he believes will be supported in 2008 by an increasing appetite for consolidation as well as continuing demand from China and India. As his colleague Tim Williams said, the mining industry is all about mergers and acquisitions. “The mining sector is structured for acquisitions from top to bottom level,” he said.