Int’l Miners Dig For China Dollars 外资希望搭载中国矿企全球并购的顺风车

By newsdoug on December 23, 2011

Foreign firms see ricches in China mining A recent series of Chinese acquisitions in the global mining space have touched off a mini-gold rush among foreign firms looking to cash in on the action through various tie-ups, including 2 new deals announced this week, one in the mining equipment sector and the other in gold exploration. All this comes as Yanzhou Coal (Shanghai: 600188; HKEx: 1171; NYSE: YZC) one of China’s top miners, has just sealed a deal to buy Australia’s Gloucester Coal for more than $2 billion (English article), and against a broader backdrop that has seen Chinese resource firms scramble to fulfill Beijing’s call to acquire global assets to make the nation more energy self sufficient. These latest deals, while smaller, show the China global resource grab will offer not only opportunities for owners of big global assets, but could also provide some interesting possibilities for smaller firms in niche businesses. In the more interesting of the 2 deals this week, mining equipment maker Joy Global (NYSE: JOY) has received approval to buy an additional 41 percent of Chinese peer International Mining Machinery (HKEx: 1683) for nearly $600 million, bringing its stake in the company to nearly 70 percent. That deal follows a similar one by bigger name US rival Caterpillar (NYSE: CAT), which said last month it would buy another Chinese mining company, ERA Mining Machinery (HKEx: 8043). (previous post) Clearly Joy and Caterpillar realize that companies like Chinese mining firms will need lots of equipment to tap their future acquisitions and are positioning themselves to be key suppliers. In the other news bit, a Canadian company called St. Elias Mines (Toronto: V), said it has held meetings with high-level Chinese officials that could result in Chinese investment in the company’s gold mining operations. (company announcement) That announcement, which St Elias clearly issued to generate hype, comes just a month after reports emerged that another Chinese firm, Shandong Gold (Shanghai: 600547), was pursuing a $1 billion purchase of a Brazilian gold mining asset, Jaguar Mining (Toronto: JAG). (previous post) Clearly global companies that work in and around the mining business are noticing China’s appetite for worldwide assets, and I would expect to see many more similar tie-ups in 2012.

Bottom line: 2012 will be a big year for foreign tie-ups with Chinese in the mining space, as foreigners look to cash in one an expected global buying spree by China’s resource companies.

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