Chinese firms back on the hunt for mining treasure as majors offload assets – by Eric Ng (South China Morning Post – July 25, 2016)

Study shows domestic firms snap up US$4.49b worth of overseas mining interests in the first six months, an 18.2pc rise

Resurgent Chinese interest in overseas mining acquisitions is expected to remain strong, amid expectations that metal prices may be bottoming out and as international mining majors look to improve their portfolios by selling assets.

Domestic firms snapped up US$4.49 billion worth of overseas mining assets in the first six months of the year, an 18.2 per cent rise on the US$3.8 billion in the same period last year, according to data collated by Mergermarket which has co-published a report on the findings with international law firm Baker & McKenzie.

“In the past, China’s demand [for overseas assets] has been driven by central [government] policy, [but now] we are seeing more opportunistic buying,” said John Mollard, global head of mining at Baker & McKenzie.

“The [rising deal flow] perhaps reflects a view that commodity prices are near the bottom [of their cycle], and the fact that many international majors have been adjusting their asset portfolios [amid the downturn] so that better assets are becoming available.”

The law firm has advised Chinese firms in their outbound acquisition deals and earned fees from such work. Mollard expects this year’s total deal value to at least match last year’s, after what had been an annual downtrend since 2011.

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