China's 2010 M&A favors emerging resource countries

“Africa, South America, Central Asia and other regions have become a new focus of Chinese companies’ overseas investment in minerals,” said Wu Guoqiang, partner of Ernst & Young China's energy industry industry, on the 8th of the Ernst & Young Global Mining and Metals M&A Deal & Report. At the press conference, he pointed out that this year, especially from the actual situation of the customers of Ernst & Young services, this trend can be clearly seen.

He said that with the rise in commodity prices, if you want to invest in mine resources projects in traditional mineral investment sites such as Australia and Canada, not only do you have a limited number of M&A deals to choose from, but you also have high asking prices and difficult government approvals. In comparison, some developing countries such as Africa, South America, Central Asia, etc., have gradually been favored by overseas investment by Chinese companies because of their abundant resources and relatively good prices.

It is understood that despite the year-on-year decline in global transaction volume in 2009, the Asia-Pacific region’s transaction volume reached 20.2 billion U.S. dollars, accounting for more than one-third of the total global transaction volume. The most active countries in Asia Pacific region are China, Australia, South Korea, Indonesia and India. In addition, many investors have shown a strong investment interest in Mongolia.

The report shows that in the past ten years, China has completed 369 mining and metal industry M&A deals with a turnover of more than US$50 billion. In 2009, China’s M&A transactions in the mining and metals industry amounted to US$16.1 billion, accounting for total global transactions. 27%. Globally, China is the top buyer, and 58% of the acquisitions take place in Australia and Canada.