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People's Daily Online>>China Business

Opportunities seen in mining, metals

By Zhao Qian (Global Times)

10:37, November 29, 2011

Chinese buyers planning overseas acquisitions in the mining and metals sector will have more opportunities as prices and valuations have declined significantly since early October this year, accountancy firm Ernst & Young said in a report on Monday.

The opportunity to secure cheaper assets is partly thanks to current global market volatility and re-tightening of capital availability, the report said.

"In particular it is likely there will be 'value' acquisition opportunities among the emerging mid-market, single project companies that need the next wave of capital investment to take pre-development assets from the proven feasibility stage to development and production," Mike Elliott, global mining & metals sector leader at Ernst & Young, said at a press conference in Beijing on Monday.

In 2009, Chinese companies accounted for 24 percent of all the mining and metals deals globally by value, and they acquired assets with relatively low risk, low cost and high quality, according to the report.

"At that time, Chinese buyers succeeded mostly because the rest of the sector was either deterred by volatility or constrained by lack of capital availability. This may be another such opportunity," Elliott said.

But Elliott told the Global Times that currently Chinese companies have more competition from other countries and regions than in 2009.

"There are still challenges for Chinese companies, especially for State-owned ones, which are required to be more transparent, such as disclosing how they will operate the assets they buy," Elliott told the Global Times.

Zhou Shijian, a senior researcher at the Institute of Sino-US Relations at Tsinghua University, told the Global Times that mining and metals prices would be cheaper because of declining demand for bulk commodities under the current sluggish international economic conditions.

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