The race to meet soaring energy demand from artificial intelligence (AI)-driven data centers, coupled with the global competition to secure critical minerals, is powering M&A in the Natural Resources sector.

Dealmaking increased 28.8%, from USD 325.4bn across 784 deals in 2024 to USD 419bn across 769 deals in 2025, according to Mergermarket data. The Utility & Energy sector accounted for half of last year’s deal volume.

AI is not alone in fueling the M&A frenzy, said Andrew Gilbert, partner at energy transition-focused private equity firm Energy Capital Partners. “There are a lot of other sources of electricity demand.”

Tangible instances of this demand include liquefied natural gas (LNG) exporting, other Gulf Coast area development, and the ongoing electrification of transportation,” he added.

Gassing up

Investors remain eager for operating natural gas plants capable of powering AI-intensive data centers.

“The market is ripe for auctions in this space,” said Morgan Hollins, partner at White & Case’s Mergers & Acquisitions practice. “Players want to get in and get involved.”

Constellation Energy’s USD 34.1bn acquisition of ECP-backed Calpine and NRG Energy’s pending USD 12.5bn acquisition of LS Power’s natural gas portfolio were 2025’s largest deals in the Utility & Energy-Electric Power subsector.

Utilities, PE firms, and independent power producers remain major cheerleaders for natural gas, said Paul Astolfi, partner at A&O Shearman.

Blackstone’s pending USD 11.8bn acquisition of TXNM Energy and NorthWestern Energy’s USD 6.8bn merger with regulated utility Black Hills are some of the largest deals involving PE firms and utilities.

There were three power deals of more than USD 10bn in value in 2025, which helped explain why M&A volume in the Natural Resources sector increased from last year, while deal count dropped.

There were no power deals of more than USD 10bn in 2024.

The new ‘gold’ rush

The global race for critical minerals including copper, lithium, and cobalt – vital for data centers, electric vehicles, and solar-panel materials – pushed mining M&A volume to a high of USD 55.2bn, 146% above the USD 22.4bn recorded in 2024, according to Mergermarket data.

Anglo American’s USD 23.6bn pending acquisition of Teck Resources was the sector’s largest deal.

The transaction, endorsed by the Canadian government, will create a top five global producer of copper at a time when demand for the metal is projected to rise 50% by 2040 – from today’s 28 million metric tons to 42 million.

The scramble for critical minerals may extend to Venezuela, which has sizable bauxite deposits and an aluminum value chain.

Along with a “good source of oxide,” Venezuela holds many advantages, said Edgardo Gelsomino, research director of aluminum at Wood Mackenzie.

“You have the Orinoco River that is a very convenient waterway for transportation. You have cheap energy, potentially from one of the biggest oil reserves in the world. You already have an infrastructure for aluminum production. You have hydropower. You have everything.”

Record-high gold prices of more than USD 5,000 per ounce have also driven dealmaking, with Coeur Mining’s USD 7.3bn pending acquisition of New Gold being the largest transaction involving a gold miner.

Renewables consolidate with credits ending

A consolidation wave in North America’s renewables subsector pushed M&A volume in the first half of 2025 past the whole of 2024. And appetite for greenfield and development assets continues, said White & Case’s Hollins. “I wouldn’t be surprised to see more large-dollar platform acquisitions,” she said. “Players with enough capital are going to be more attracted to acquiring platforms than individual assets.”

The sunsetting of tax credits under US President Donald Trump’s One Big Beautiful Bill is catalyzing investments in portfolios over single assets, which previously included tax credit revenue into their financial models.

A&O Shearman’s Astolfi anticipates well-capitalized strategics to take over smaller players that over relied on subsidies that are sunsetting.

Hollins noted that PE firms watching the wave of solar distributed generation (DG) platforms coming to market may choose to invest only after strategic buyers have consolidated the market. Strategics, she added, are likely to have an advantage in shaping how a short-term consolidation unfolds.

“These buyers out there are increasingly well-capitalized and supported by even bigger balance sheets and companies, so we think it’s a durable and exciting theme,” ECP’s Gilbert said.

France’s Engie and Austin, Texas-based RWE Clean Energy are some of the companies exploring sales of their DG businesses, as reported by this news service.

Oil fluctuations

Oil-and-gas was the sole sector that recorded a decline in M&A activity, with deal volume dropping from USD 163.7bn over 275 deals in 2024 to USD 152.8bn over 275 deals last year, according to Mergermarket data.

The decline coincided with a price drop in West Texas Intermediate crude – the US oil benchmark – from about USD 73.96 a barrel at the start of 2025 to USD 52.42 by year’s end. “The biggest driver in deals, or at least the biggest driver in valuations for transactions, is commodity prices,” said Justin T. Stolte, global chair of Latham & Watkins’ energy & infrastructure group.

Should the Trump administration succeed in its attempts to reduce gas prices by pushing crude down to USD 50 a barrel, “you would likely see a slowdown in activity on the oil side” in 2026, Stolte added.

The oil price drop led to an uptick in stock-for-stock deals among upstream public companies versus typical cash acquisitions and divestitures, said J.P. Hanson, managing director and global head of Houlihan Lokey’s oil & gas group.

However, dealmaking involving natural gas assets is less tied to commodity prices and is expected to remain strong in 2026, driven by global LNG and data center fuel demand, Stolte added.

According to Hanson, 2Q25 was the first quarter since early 2000s when natural gas transactions outnumbered oil transactions.

2025 also saw multibillion‑dollar upstream and midstream exits by private equity firms, with the USD 9bn sale of midstream company Colonial Enterprises – backed by KKR, La Caisse, IFM, and Koch – to Brookfield Infrastructure Partners standing as the largest.

“We are certainly seeing cash deals in the midstream space and that’s driven solely on private equity guys [who] really don’t want to sit on shares [and] secondarily, they’re flush with cash,” said Andy Hull, managing director and head of midstream in Houlihan Lokey’s oil & gas group.