Report: Mines And Money Beijing 2010 - Chinese Dragon

Beijing, June 9, 2010 AEST (ABN Newswire) - Overseas investment by Chinese mining companies continues to increase. According to Zeng Shaojin, the vice president of China Mining Association, the country invested in 45 mining projects in the first quarter of this year, worth US$3.0 billion, compared with 155 projects, valued at US$4.5 billion, in the whole of the May-December period of last year.

Importantly, the Chinese private sector is also in the ascendancy. The proportion of these investment ventures conducted by state-owned enterprises (SOEs) has fallen from 53% in the May-December period of 2009 to 36% in the three months to end-March 2010.

Mr Zeng made the observation on Tuesday at a conference in Beijing organised by Aspermont UK (ASX:ASP), publisher of the 175-year-old Mining Journal. Over 400 delegates attended the first day of the two-day Mines and Money conference and exhibition*.

The global mining and metals leader of Ernst & Young, Mike Elliott, confirmed the dominance of Chinese companies, noting that they accounted for 30% of all mining transactions last year. He described 2009 as a "deal-making hot spot" because of a shortage of funds from conventional sources.

Mr Elliott said that the trend has continued this year, with a further jump in deal-making. However, "the cheque book is no-longer enough", according to Mr Elliott, and Chinese companies are now differentiating themselves by offering unique technology (particularly with regard to low-grade deposits) and, crucially, an "appetite in offering infrastructure".

Lilian Luca, a director of The Beijing Axis, observed "it is always necessary to pay a premium for great projects but instead of paying investors, the Chinese were paying in the form of infrastructure". This, he commented, was to the long-term benefit of the region, or whole country, rather than just the project's shareholders.

Adrian Macartney, the African mining leader for Ernst & Young, described the Chinese offerings as a "package deal".

The chairman of China International Mining Group, Andre Gauthier, accepted that Chinese companies were "not using the same business rules". This did not make them worse, or wrong, he said, "just different". The Chinese philosophy is based on the importance of national development, according to Mr Gauthier, while Western philosophy was based on corporate economic activity.

Mr Gauthier said that "Chinese companies know where they are going - other countries will have to follow".

The president of Global Mining Capital Corp, Keith Spence, told delegates that Australia has remained the focus of most of China's activity in the past year (42% of the total) but that there was increasing interest in other countries. There is also much less emphasis on control, with 52% of the deals in 2009-10 being for equity stakes of under 20% (twice the proportion of 2007-09).

In their financing deals, Chinese companies are increasingly demanding long-term metals supply arrangements, rather than equity. This is to satisfy China's metals consumption, which continues to dominate world markets.

* The Mines and Money series of conferences were launched in London at the end of 2003, and in recent years have incorporated events in Dubai and Hong Kong. This week's event at Beijing's China World Hotel marks the next stage in the growth of the Mines and Money brand.

About Mines and Money Beijing 2010

Bringing together some of China's most influential decision-makers from the investment communites, government and mining sectors, along with a visiting international audience, Mines and Money Beijing will be the major event of its kind in the Chinese capital in 2010.

Incorporating a large exhibition, the two-day conference will be staged at the five-star China World Hotel in Beijing's central business district and cover a broad spectrum of issues.

Contact

Melina Day Tel: +44-20-7216-6097 Email: melina.day@aspermontuk.com