China leads in resources buy-ups – by Paul Garvey (The Australian – August 31, 2013)

http://www.theaustralian.com.au/business

An analysis by The Weekend Australian found that Chinese interests bought $5.4 billion worth of Australian-owned mining and energy assets during the 2013 financial year, eclipsing Japan and Canada as the most active foreign investor in the sector.

While overall foreign acquisitions in Australia’s mining and oil and gas industries halved during the year, reflecting steep falls in both commodity prices and resource stocks, China’s investments in the mining sector held steady from 2012 levels.

The ongoing corporate activity challenges the notion that Chinese companies feel unwelcome when investing in Australia, following controversies over mining deals in recent years such as the blocked Chinese acquisition of OZ Minerals’ Prominent Hill mine and Chinalco’s failed deal to buy into Rio Tinto’s West Australian iron ore operations.

Comments during the week by Kevin Rudd, in which he said he was anxious about an “open-slather approach” to foreign investment, have reignited concerns about perceptions of hostility from Australia towards Chinese investment.

While the Prime Minister’s comments did not refer to China, they have been criticised by industry groups as “borderline xenophobic” and as likely to send a negative message to Chinese investors.

The data suggests that, at least during 2013, any Chinese affront to Australia’s foreign investment commentary failed to materially dampen its acquisition activity in the resources sector. The purchases in Australia accounted for about 10.8 per cent of China’s mining and energy acquisitions globally, up slightly from 9.7 per cent in 2012.

Nev Power, chief executive of iron ore miner Fortescue Metals Group, said that although the issue of Australia’s perception of Chinese investment had been raised with him in China in the past, it had not resurfaced during his more recent visits.

He said the statistics from the Foreign Investment Review Board, which reviews inbound acquisitions of Australian assets, did not support the idea that Australia was resistant to Chinese investment.

“There was a little bit of that sort of rhetoric going around, but if you look at the facts of it with FIRB . . . there’s been something like 350 approvals and only six of those have had conditions attached,” Mr Power said.

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