Domestic Enterprises' Overseas Mining Investment Frustrated

The "Guidelines for the Exploration and Exploitation of Mineral Resources in Major Countries in the World," led by the Ministry of Land and Resources Information Center, is being completed and has been compiled into 82 countries. This investment guide is only part of the series of mineral development guideline reports that the Ministry of Land and Resources is preparing. However, it focuses on the key issues most concerned by the “going out” strategy of mineral enterprises. Including the basic situation of the destination country, foreign business access regulations, mining management system, mineral property rights system and other policy environment information. Previously, Chinese companies tried to go out of the country and tried to get out of the country. However, the situation was not satisfactory. The mineral resources sector became the hardest-hit areas. The painful lesson allowed more and more mining companies to reflect on their previous impulse to “see digging” and the policy environment analysis has become The first element that must be considered when investing overseas.

Since 2012, the global mining companies have generally deteriorated their profitability and cash flow, and the prices of international mineral products are experiencing a more obvious decline. According to a report from the China Mining Association, in the first three quarters of 2013, China National Mining Corporation accepted a total of 103 cases of overseas mining investment projects from Chinese companies, which was a decrease of 8.0% year-on-year. China's agreement investment amounted to US$3.136 billion, a year-on-year decrease of 10.9%.

China Aluminum, which previously suffered frequent losses in overseas investment, also began to reflect on its overseas investment strategy. “In the process of internationalization, we recognize that the main factor in the success or failure of investment projects lies not only in the scale and quality of the resources, but also in the development conditions of the infrastructure, as well as the policies and laws of the project location and the working environment of the community. Liu Xiangming, senior vice president of Aluminum Corporation of China, said.

Confidence fails to learn more than successful experience. Wang Jiahua, vice president of the China Mining Association, said that according to the statistics of the China Mining Association, the failure rate of mining overseas M&A projects was nearly 80%. Similar embarrassing statistics have long since spread across the industry. Although the statistical results of various agencies are not the same, the failure rate is high, which makes mining companies look away from mineral resources scattered around the world. "From January to September this year, there were 99 projects registered in the Minmetals Chemicals Chamber of Commerce with a total investment of 3.287 billion U.S. dollars," Yu Yi, vice president of the China Minmetals Chemicals Import and Export Chamber of Commerce, said, "The forecast for the annual project will reach around 140, The investment amount is about 5 billion U.S. dollars, and the number and amount of projects have dropped by 15% and 34% from last year.

The data on overseas investment proves that the operation is slow and the enthusiasm of “going out” has not faded. At the 2013 China International Mining Conference held on November 3rd, nearly 7,000 delegates from more than 50 countries and regions attended the conference. More than 400 Chinese and foreign exhibitors took the opportunity with their own projects and equipment.

Jin Chen, president of Jinjiang Mining, is one of them. He is seeking a joint sea partner at the conference and hopes to jointly develop a coal mine project in Southeast Asia, even though Chen Hao believes that the political risks in the Philippines and Vietnam are relatively high before Indonesia. There have been incidents of exclusion but now it should not happen again."

There are many entrepreneurs like Chen Hao and they are actively looking for opportunities for themselves in the industry conference. At each sub-forum of the China International Mining Conference, the directors of the Ministry of Land and Resources acted as moderators, and mining entrepreneurs, investment institutions, and consultants constituted the objects to be surrounded.

“We are now complaining that the big situation is not good. It is actually your own efforts are not enough, because our economic engine in China is still turning at a high speed,” said Wang Jiahua, executive vice president of the China Mining Association. “Ten major non-ferrous metals and iron The ore is increasing, not decreasing, and we always have confidence in the global mining industry."

Difficulties need something more than confidence. “It is not easy to engage in an overseas project, and it feels like losing a layer of skin.” Yu Junhu, general manager of Overseas Development Department of China National Gold Group Corporation, is looking for opportunities. “The developed countries still look at production, but they often have higher prices. If we have room for optimization after entering, we can increase production capacity and reduce costs, we first choose to produce, because the risks are smaller, the licenses are all in place, and the EIA is over. Next, we choose to complete the feasibility study and choose greenland comparisons. Less because there are many uncertainties in the green space project."

There are many things that need to be done before going out. “Every time before investing, an assessment will be made. The first factor to be taken into account is definitely the policy environment, followed by infrastructure, labor, and exchange rates,” said Li Zhilin, general manager of Zijin Mining's (2.43,-0.03,-1.22%) Group International Division, who told the economic watchdog. Newspaper, he is concerned that Australia will increase the 5% resource tax rumors are true.

The way of adjusting the tax rate is only one aspect of the policy changes in various countries, and it is the industry that is guilty of encroaching on equity. In 2008, the “Localization and Economic Licensing Act” signed by the President of Zimbabwe became a classic case, which stipulated that newly-invested companies must reserve more than 51% of shares for local people before they can be allowed to operate. Even with abundant graphite and platinum, this localization bill makes investors cautious.

When considering the destination country for investment, resource factors give way to the policy environment. There are always minerals that can be developed in the vast land. At the risk of cross-industry, we must “go global” to seek opportunities.

“With the guidance and encouragement of policies, the enthusiasm of companies currently going out to engage in mining investment is still very high, but they need to grasp the strategy of investment and the rhythm of investment.” Yu Yi said, “especially cross-industry companies lack of mining In the context of investment experience, it is prone to miscalculate the value of resources and ignore investment risks, which may lead to investment failures."

According to YU Yi, more than half of the enterprises registered for mining investment from January to September this year were investment companies or trading companies that did not have a background in mineral exploration. The total investment of these companies reached US$207 million, accounting for 43% of the total investment. %.

However, different countries have different policies. Even if they are in the same country, the regulations of the federal government and the states are different. It is not easy to understand the complete and complete policy environment of the destination country. According to Yan Zhengming, chief partner of Beijing Yuren Law Firm, mining rights acquisition methods, mining methods, methods, listing methods, and regulations on environmental protection, labor, and infrastructure are not exactly the same, so they involve cross-border mergers and acquisitions and investment. At the time, they had to use dozens of lawyers to complete the same project.

Research on the policy of the destination country is often meticulous and detailed, from the study of the provisions of the mining law, to the way to ponder the neighbors.

The Peruvian project invested by Chalco built a sewage treatment plant before the start of construction, and also established churches and temples in the local community to create a harmonious relationship with the government and community residents.

But this type of good intentions is not necessarily accepted locally. Hu Tao, a senior researcher at the World Resources Institute, believes that sometimes it is the needs of the central government to build schools and build schools, not necessarily local needs.

At present, the Ministry of Land and Resources is trying to provide some instructive international exploration and development guides for mining companies, including the basic conditions of the destination countries, foreign business access regulations, mining management system, mineral property rights system and other policy environment information. In addition, the China Geological Survey is doing a comprehensive study of global mineral resources, investigating the resource potential of important global metallogenic belts, building a global mineral resources information system, and merging the survey data into a database for enterprise inquiries.

"Explicit costs are not afraid. What fears most is the hidden cost. If you understand what you need to pay, for example, Australia’s policy requirements are strict, but there is no implicit cost, and some countries are not sure.” Relevant person in charge of Mining Co., Ltd. said.