Chinese private investors eye overseas mining

TIANJIN - Chinese private firms will be at the forefront of the country's overseas mining investment despite current economic woes, according to officials and experts.

Mining investment, especially made by private investors, will remain high in the next 10 to 20 years supported by high-level domestic mineral consumption, according to Gan Fei, a researcher from the Ministry of Land and Resources.

He made his comments at an international mining forum that ran from Saturday to Tuesday in the port city of Tianjin.

Global mining investment has been undermined by the lackluster eurozone and US markets since the 2008 financial crisis. But Chinese mineral demand has remained robust fueled by the economy's high growth, though at a slower pace.

One fourth of global mineral demand this year is estimated to come from China, according to Cao Yuanzheng, chief economist with the Bank of China.

Chinese State-owned companies used to dominate the country's mining investment. However, private investors have benefited on the back of favorable government policies.

To meet surging mineral demand, the government introduced a string of measures, which included a guideline issued in June aiming to lure private capital to conduct surveys and exploitation of the country's mineral deposits.

In its latest move, the MLR on Oct 26 signed a memorandum with Tianjin municipal government to build a mining financial reform base in the city, a move to channel more social capital to the sector.

Private investors hold nearly 50 percent of the exploration rights of the country's non-oil and -gas resources, and more than 90 percent of non-oil and -gas mines, according to Gan.

"Chinese investors are expected to throw trillions of yuan in mining from 2013 to 2015. Half of the investment will be made by private capital," Gan predicted.

Data from All-China Federation of Industry & Commerce showed that the average business revenues of China's top 500 private mining firms surged to 14.05 billion yuan in 2011, from 3.27 billion yuan ($518 million) in 2007.

Meanwhile, as the capital-intensive sector saw less cash flow due to a plunge in investment from crisis-hit developed economies, global demand for Chinese money has increased.

"We welcome Chinese enterprises to invest in Australia. They can either join in mining exploration or buy our equipment and technologies," said the Australian ambassador to China, Frances Adamson. China currently ranks as the country's third largest direct foreign investor.

In the first half of 2012, Chinese enterprises invested $1.42 billion in 64 overseas projects on solid minerals, according to Chen Xianda, vice president of China Mining Association.

The projects covered 32 countries and regions, ranging from coal, ferrous and nonferrous metals, and precious metals, Chen said.

"Resource-rich regions such as North America now face great pressure to attract foreign investment. For Chinese private investors, I think it's worth tracking opportunities in these regions," said Guo Jianwei, a senior official for monetary policy from the People's Bank of China.

Vice Premier Li Keqiang said in a congratulatory letter to the forum that China will continue to expand mining exploration according to domestic needs with the advance of industrialization and urbanization.

The annual China Mining Congress & Expo, co-hosted by the MLR and Tianjin municipality, attracted about 6,000 participants from more than 55 countries and regions.