TORONTO – China is not taking over the world’s mining industry says the latest Mining Deals report from PwC (formerly PricewaterhouseCoopers LLP). In 2010 only 6% of global mining deals involved Chinese acquirers, compared to acquirers from Canada (36%), the United States (16%) and Australia (16%).
The report indicates the Chinese will take a more aggressive approach to mergers and acquisitions in 2011, paving the way for the world’s first Chinese-owned diversified mining powerhouse.
“The reality is China has been a very active investor in global mining projects in recent years, but its current market share pales in comparison to Canada and other developed countries,” says John Nyholt, national leader of transaction services at PwC. “Chinese-led M&A this decade has been impressive, but consider that Rio Tinto and Xstrata alone have completed more acquisitions during the first ten years of this millennium than all Chinese buyers collectively.”
The report notes 713 deals in 2010 that involved a Canadian buyer compared to 161 involving a Chinese buyer. Year-end results bring the decade ended 2010 tally to 400 Chinese deals worth close to US$48 billion, which is considerable given Chinese buyers were negligible players in mining M&A only 10 years ago.
As for 2011, the PwC report predicts the pace of deal activity and values to increase in 2011. Anticipated upward pressure on deal values, in turn, may prompt more seniors to invest in organic growth. PwC also expects more takeover activity of junior rare earth projects (as developed nations seek to secure supply amidst concerns of Chinese market concentration), uranium projects (as Asia and other regions set out on nuclear build-outs), and complementary extractive industries like shale (as energy security becomes a larger global concern).
For more information or to read the full Mining Deals report, visit www.PWC.com/ca/MiningDeals.