Mines and Money Beijing is now just a couple of weeks away so we caught up with Chen Biao from Jinjiang Mining Fund (who is speaking on Day 1 of the conference program) to ask about Chinese investment into overseas mining projects, which areas Chinese investors will focus their spending, changes in the Chinese investor profile and if he foresees an uptake in alternative mine finance structures.
What’s your growth forecast for Chinese outbound investment in the mining and energy sector? Will the push to “open up” increase the amount of investment seen over the next few years?
In the long run, Chinese groups will be investing more in mining and energy sector since resources become more and more important in continuing development of China’s economy. The push to “open up” will definitely gear up the amount of outbound investment.
What areas of the sector will see the largest levels of investment (type of commodity, region etc)?
The commodities China lacks such as copper, bauxite, iron, gold, silver, coking coal, nickel, etc will be always on the top of list.
Mining friendly countries with a good legal system and stable regime will be welcome, such as Australia, Canada, South Africa, Zambia, to name a few. South America and Latin America are drawing people’s attention. So far only a few big groups have investment there due to language barrier and lack of familiarity to this region.
Are Chinese resource investors exploring different models of funding and investment e.g streaming and royalties?
I think it will take some time before most Chinese investors learn how to ultilise western financial tools. Debt and equity are the most common accepted financing means. Lenders are Chinese banks which accept guarantee of mother groups within China and lend money in US currency to invest overseas. Investment for streaming or royalty may not be most Chinese investors’ cup of tea. Most time they invest for equity or products.
In the last few years, have you seen a change in the profile of the Chinese investor market? Is investment from private funds and investors growing?
Up to now, big investments are done by SOE groups, private sector plays a far less important role. However, this might change after the new government lays out new schemes for political and economic reform. Unfriendly voices from invested countries towards Chinese SOEs will speed up such changes and will gear up private sector investment overseas. For small non-mining groups, the best way for them is to join private equity funds to ensure success of their investment.
What do mining companies need to consider when seeking capital from Chinese investor?
Compared with then in a few years ago, Chinese investors have become far more experienced, from project evaluation, risk assessment, cost control, operations, etc. A mining company has to understand how much of money their Chinese targets could contribute in a long time period. They have to draw a clear picture as to the project time line, never being over optimistic. Potential risks such as compliance, permitting, aboriginal issue, environmental concerns, should be all cleared up and identified. Honesty of the core team is most important than any other factors.
For more in-depth analysis on Chinese outbound investment in foreign mining projects and to explore capital raising options in the region, take part in Mines and Money Beijing in June.
Along with Erik, you’ll hear perspectives and investment strategies from Jionghui Wang from China Minmetals Corp, Tong Junhu from China National Gold Corporation, Bill Weng from Bank of China International, and a selection of leading resource investment funds like Chen Biao from Jinjiang Mining Fund, Dr Zhang Yan from Qinglan Blue Ocean Mining Investment Fund and many more.
To attend Mines and Money Beijing, download the agenda or register online.
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