China's Outbound Mining Investment: Digging To Continue
BMI View: While the cooling of Chinese economic growth will drag on import growth for industrial metals over the coming quarters, China will retain its appetite for direct overseas mining investment due to structural shortfalls in domestic production. We expect Africa to attract the bulk of Chinese interest due to growing commercial and political ties, as well as the rich deposits of high-grade iron ore on offer. Investment flows into copper and gold mines abroad should also continue over the coming years, although the path towards mine development will not be smooth-sailing for many Chinese investors.
We expect an increasing number of Chinese companies to venture abroad for mining investment in the coming years. While miners across the board are scaling back their ambitions with the softening of mineral prices, a structural shortfall in domestic production of key minerals will sustain the push for overseas mining by Chinese investors. Indeed, China is on a massive drive to improve its self-sufficiency in mineral production. Market sources indicated that the country is planning to import around 50% of its iron ore from Chinese-owned foreign assets by 2015. While this target may be overly ambitious, we see it as firm indication that the drive for direct access to foreign minerals will continue apace.
Africa Most Attractive
|Domestic Shortfall To Drive Overseas Ventures|
|China - % Of Global Production & Consumption (2013)|