China's multi-metal resources overseas mineral mergers and acquisitions are imperative

Abstract Existing mineral resources can no longer meet the needs of China's rapid economic development. Cross-border M&A activities have become the main way to obtain new mineral resources in China. According to the statistics of the National Development and Reform Commission, by the end of 2012, the stock of investment in China's overseas mining industry is close to 50 billion US dollars, even...
The existing mineral resources can no longer meet the needs of China's rapid economic development, and cross-border M&A activities have become the main way for China to obtain new mineral resources. According to the statistics of the National Development and Reform Commission, by the end of 2012, the stock of investment in China's overseas mining industry was close to 50 billion US dollars, showing a rapid growth for ten consecutive years. The international political, economic and cultural environment faced by overseas resources cooperation is very complicated. Many enterprises have insufficient understanding of risks and have caused major investment losses. According to statistics, by the end of 2012, the amount of investment in China's overseas investment was nearly 40%; the data of the State Administration of Foreign Exchange showed that the net income of China's overseas investment in 2012 was -577.4 billion, and in 2011 it was -855.3 billion. .

China's various resources need long-term imports, and overseas mineral mergers and acquisitions are imperative

China is the world's largest consumer of non-ferrous metals. In 2012, China's consumption of non-ferrous metals accounted for more than 50% of the world's total. Among the commonly used non-ferrous metal varieties, China's copper, aluminum and nickel resources are relatively scarce, and the global reserves account for only 4%, 2.86%, and 4%, respectively; while lead-zinc resource reserves are among the best, but with more than 50% of consumption. In comparison, imports are still needed. In 2012, China's copper and aluminum resource gaps reached more than 80%, nickel resources gap was about 33%, and expanded compared with 11 years, lead and zinc basically maintain supply and demand balance, but still need a small amount of imports. In addition, China's smelting and processing capacity is much larger than mine production capacity. Although traditional trade imported concentrates can meet production needs, resource discourse rights and pricing rights are increasingly concentrated in the mines, and downstream smelting and processing profits are becoming less and less, even losses. Therefore, the acquisition of overseas resources by Chinese mining companies is also an effective means to break through the constraints of international mining giants.

International reserves standards are quite different from those in China

Resource reserves are the core of investment in mineral projects, but each country has its own individualized storage standard. Chinese mining companies need to understand these reserves standards for overseas investment. In the global mineral investment, Australia's JORC norm and Canada's NI43-101 are widely used internationally. Although they look similar to the content and form of the "Solid Mineral Resources/Reservoir Classification" in China, the difference is different. Very large, we elaborate and compare them from five aspects: standard specification, resource/reserve description, use, author's requirements, and application scope.

Analysis of mining investment in major overseas regions

Australia and Canada are mature and advanced mineral investment regions in the world. They have a sound legal environment, a stable social environment, and a good infrastructure. Investors have laws to follow. Whether it is JORC or NI43-101 specification, its resource reserve estimation results are more accurate, information mining is deeper, and expression is more vivid, which will greatly reduce the risk of mineral investment. However, mining investment in Australia and Canada requires expensive labor, complex labor relations, and high environmental and tax costs. Africa and Southeast Asia are the world's emerging mining investment regions, with lower labor costs and environmental standards than Australia and Canada, and tax incentives for overseas investors. However, infrastructure in most parts of Asian and African countries is lagging behind, which will significantly increase the initial investment costs of Chinese companies, and investors will face higher political, religious, socio-cultural and moral risks.

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