Ever heard of Ivanhoe Mines, RTB Bor or SQM? These companies, which are not well known outside the mining industry, have investors from China on board since last year. After all, Chinese companies made a veritable shopping trip for mining companies in 2018, reports the Financial Times (FT) - with a very clear strategic focus.
A total of seven billion dollars Chinese companies put in foreign mining companies, according to "FT". This show data from the financial market platform Dealogic. In doing so, China's corporate groups are securing targeted shares in mining operators who supply raw materials for electric car batteries and sustainable energy generation.
For example, last year Chinese companies bought shares in companies that operate copper, cobalt or lithium mines - in countries such as the Congo, Serbia or Chile. Just over a decade ago, Chinese corporations also increased their purchases of commodities - at the height of the commodity boom, they spent $ 17 billion on acquisitions. However, they invested primarily in operators of iron ore mines.
Now obviously the backup of important battery raw materials is in the foreground. The largest purchase came last year from China's mining company Tianqi Lithium, which bought $ 4.1 billion in a 24 percent stake in Chilean lithium producer SQM. Active was also the Chinese mine operator Zijin. The mining company recently completed a $ 1.4 billion acquisition of the Canadian company Nevsun Resources, which owns copper and zinc mines in Serbia (RTB Bor) and Eritrea.
Why western mining giants do not hold against?
China's state-owned corporation Citic paid $ 557 million to become the largest shareholder in Canadian mining operator Ivanhoe. Ivanhoe is developing a mine in Congo, which will tap large copper reserves. Cobalt is often produced together with copper, which is used in larger quantities for electric car batteries. The Chinese are likely to continue their shopping spree this year as well, say commodities industry bankers familiar with to "FT". Last week, for example, China Molybdenum significantly expanded its share of a copper and cobalt mine in Congo for $ 1.4 billion.
However, the deals of the Chinese so far hardly lead to counter-reactions from Western mining giant. Companies like Rio Tinto, Anglo American and BHP Billiton burned a lot of money in the last commodity boom a decade ago. Overall, they had to write off $ 109 billion, according to "FT" - and that has apparently made the corporations much more cautious.
With riskier acquisitions, Western companies would have big problems with their shareholders, industry insiders told FT. By contrast, Chinese corporate groups can take a more strategic approach to investing. They do not have the "excess of active investors," a mining lawyer told FT.