Chinese investment in overseas mining is said to surge to decade high

Paula Bronstein/Getty Images News

Chinese mining companies are accelerating their international acquisitions, marking the busiest year for overseas deals in over a decade as they move to secure vital raw materials essential to global supply chains, the Financial Times reported Sunday.

According to S&P and Mergermarket data cited by the newspaper, there were 10 Chinese mining deals valued at more than $100 million in 2023, the highest number since 2013. Separate research from the Griffith Asia Institute found that last year was the most active period for Chinese mining-related investments and construction projects abroad in over a decade.

As the biggest global consumer of many key resources, China’s appetite for minerals has driven its companies to invest overseas for years. But analysts say this recent wave of dealmaking reflects an urgent push to lock in resources before geopolitical tensions further restrict access, particularly in nations like Canada and the United States, where Chinese investment faces mounting resistance.

The momentum has carried into 2024. Chinese mining giant Zijin Mining recently announced plans to buy a $1.2 billion gold mine in Kazakhstan. In April, Appian (NASDAQ:APPN [https://seekingalpha.com/symbol/APPN]) sold its Mineração Vale Verde copper and gold project in Brazil to China’s Baiyin Nonferrous Group for $420 million.

While China’s Belt and Road Initiative has largely focused on modest infrastructure and transport projects, overseas mining investments have remained significant, Christoph Nedopil, director of the Griffith Asia Institute and an expert on China’s foreign investment strategy, told the FT. He said this reflects China’s strategic pivot toward high-tech industries, such as electric vehicle batteries and renewable energy, alongside growing sophistication in how Chinese companies approach these deals.

Despite dominating mineral processing, particularly for rare earths, lithium and cobalt, China still relies heavily on imported raw materials. At the same time, Western governments are working to reduce reliance on Chinese-controlled supply chains for critical minerals vital to clean energy, semiconductors, and defense applications.

Industry observers cited by the FT have noted that Chinese companies have become highly skilled in acquiring mining assets from Western competitors. Their approach often involves longer investment horizons and a greater willingness to operate in politically or economically unstable regions.

According to John Meyer, an analyst with advisory firm SP Angel, part of China’s strategy involves proactively acquiring mineral assets to limit Western access.

Leading players in China’s international mining drive include CMOC, MMG and Zijin Mining, supported by substantial financing from Chinese banks, particularly for projects in developing markets.

In regions like Africa, Chinese firms are increasingly benefiting from shifts in resource nationalism, said Timothy Foden, co-head of the international arbitration practice at Boies Schiller Flexner. Some military-led governments have been seizing or renegotiating Western mining assets, demanding higher royalties. Chinese companies, he noted, are often more flexible on terms if it means securing operational control, the FT reported.

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