Since the global financial crisis in 2008, Chinese mining companies have been active in overseas mining mergers and acquisitions. According to statistics, from January 2008 to the first half of 2009, there were more than 80 overseas mergers and acquisitions of Chinese mining enterprises, involving an amount of nearly 30 billion US dollars (the statistics here do not include oil and gas mergers and acquisitions). In general, the target minerals for mergers and acquisitions are mostly metal minerals.

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1. Characteristics of overseas mergers and acquisitions of Chinese mining enterprises

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  1. 70% of mergers and acquisitions are large mining companies

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Among the more than 80 M&A cases with incomplete statistics, more than 70% of the subjects of overseas M&A of Chinese mining enterprises are large mining companies. Among them, large state-owned holding groups such as Aluminum Corporation of China, China Minmetals, Hunan Valin, Wuhan Iron and Steel, Anshan Iron and Steel, Sinosteel Group, China Shenhua Group, Yunnan Tin Industry Group, Zhongjin Lingnan and Jinchuan Group are the main ones.

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The total amount involved is about $30 billion. Among them, the value of mergers and acquisitions of large mining group companies accounted for 80%, and the amount involved in non-state-controlled enterprises accounted for about 20%. The sources of funds for overseas mergers and acquisitions of these enterprises are very diverse, including state-owned funds, funds raised from A-shares, and financing from banks and funds.

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  2. Most of the mergers and acquisitions are iron ore

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The statistics are based on the main minerals of the acquired company. Among the more than 80 mergers and acquisitions that are not fully counted, the minerals that the acquiring company is interested in are mainly iron, copper, lead-zinc, uranium, gold and other precious metal ores. Iron mines are in the majority, accounting for about 20% of the total mergers and acquisitions. Followed by gold and other precious metal mines, accounting for about 13%. Again, copper mines and lead-zinc mines, each accounting for about 9%. Uranium ore is also a relatively popular mineral, with a total of 4 mergers and acquisitions, accounting for about 5% of the total mergers and acquisitions. Then there are some rare metals, such as Chin, nickel, manganese, tungsten, diamond, etc., each accounting for about 4%. The least is non-metallic minerals, mainly bauxite and carnallite, each accounting for less than 3%.

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3. M&A funds tend to be iron, copper and gold

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The statistics are based on the main minerals of the acquired company, and the associated minerals are based on the main minerals, and the intended investment is not listed. From the perspective of capital flow, about 40% of the capital flows to iron mines. The most notable of these is Chinalco's acquisition of the British company Rio Tinto (Rio Tinto's main ore is iron ore). Currently a major shareholder of Rio Tinto.

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The investment capital flowing into precious metals such as gold is about 3 billion US dollars, accounting for about 4.5% of the total amount. The acquisition of the copper mine was about $5 billion, or nearly 7 percent of the total amount involved. The amount involved in the special acquisition of lead-zinc mines is about US$1.7 billion, accounting for 2% of the total amount. In the four mergers and acquisitions of uranium mines, the amount involved was over US$100 million. The amount involved in rare metals is about $1 billion, or about 1.5 percent. The amount involved in the case of non-metallic mines is about more than 1 billion US dollars, accounting for about 2% of the total amount involved.

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4. Nearly half of M&A funds go to Canada, Australia and other resource-rich countries

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The statistics are based on the location of the headquarters of the acquired company. If a company has multiple headquarters or is listed in different countries at the same time, the statistics are based on the location of the company's main business. Among the more than 80 M&A cases with incomplete statistics, M&A funds mainly flowed to Australia, Canada and other resource-rich countries. Among them, there were 29 cases in Australia and 13 cases in Canada, which together accounted for about half of the total number of cases involved. These two countries hold a lot of global mineral resources, and their mining companies hold not only mines in their own territories, but also many mines in Central and South America and African countries.