One factor that helped the global mining industry weather the 2008–09 recession better than many other heavy industries was China’s rising presence in metals and minerals markets, both as a ravenous consumer of raw materials and a deep-pocketed foreign investor.
However, some of the pain felt by North American miners over the past year is due to China’s relative absence on the global M&A front, at least in the resource sector.
Thankfully, New York City-based Rhodium Group carried out the difficult task of compiling China’s foreign investment activities in 2014 in a newly released report that includes M&A deals, joint ventures, asset purchases and equity investments. It puts some hard numbers on anecdotal evidence, and paints a striking picture.
Globally in 2014, Rhodium tallied US$53 billion in cross-border M&A deals in all sectors by Chinese companies, off 13% from 2013 — the first annual drop since 2011, but still above the five-year average.
China’s acquisitions in energy and materials “dropped sharply,” Rhodium notes, as it turned its attention to technology, brands, financials and real estate. Chinese firms spent US$30 billion annually on energy and materials deals on average between 2008 and 2013, but this number tumbled to US$19 billion in 2014.
Rhodium comments that Chinese M&A in Canada last year “collapsed” due to both “lower interest in extractive assets and greater political scrutiny for investment by state-owned enterprises.” The latter refers to the Canadian government’s new foreign investment rules in December 2012, in connection with the controversial US$15.1-billion cash acquisition of Calgary-based oil and gas producer Nexen by China National Offshore Oil Co. in February 2013.
Rhodium’s data set, as shown to iPolitics, has only one natural resource-related Chinese M&A deal in Canada in 2014, versus 19 in 2013, four in 2012, five in 2011 and nine in 2010.
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