Chi­nese in­vest­ments with Cana­dian min­ing ex­am­ined

China Daily (Canada) - - FRONT PAGE - By LI NA in Toronto re­nali@chi­nadai­

The growth of in­vest­ment from China in Cana­dian in­dus­try may not be as strong as in the past few years, but Chi­nese in­vest­ment in Canada’s min­ing sec­tor should pick up mo­men­tum in the long run, ac­cord­ing to Yu Ben­lin, min­is­ter-coun­selor for eco­nomic and commercial af­fairs at the Chi­nese Em­bassy in Canada.

Yu made the com­ments at the China Min­ing In­vest­ment Sym­po­sium 2014 hosted by the Canada China Cham­ber of Com­merce on March 3 in Toronto. The fo­rum was held dur­ing the Prospec­tors and De­vel­op­ers As­so­ci­a­tion of Canada (PDAC) con­ven­tion in Toronto, where ad­vi­sors from govern­ment, in­vestors from the min­ing sec­tor and ex­perts and se­nior lawyers gath­ered to ex­change views on the chal­lenges and op­por­tu­ni­ties in the global min­ing in­dus­try, par­tic­u­larly in Canada.

“Al­though there are many fa­vor­able con­di­tions for for­eign in­vestors in the min­ing sec­tor in Canada, Chi­nese min­ing com­pa­nies are fac­ing var­i­ous chal­lenges and dis­tinc­tive is­sues in the Cana­dian in­vest­ment en­vi­ron­ment,” Yu noted.

Along with the global min­ing mar­ket’s drop last year, Chi­nese min­ing in­dus­tries showed lack­lus­ter per­for­mance as well. In­vest­ment in China’s min­ing sec­tor main­tained growth but was 7.8 per­cent­age points slower than that of the over­all fixed as­set in­vest­ment in the first ten months of 2013. In the first half of 2013, in­vest­ment in min­eral ex­plo­ration was off 24 per­cent year-on-year. Stock prices of Chi­nese min­eral com­pa­nies over­all de­clined.

“The rel­a­tively weak per­for­mance of min­ing in­dus­tries and mar­kets both glob­ally and do­mes­ti­cally in turn im­pacted the enthusiasm of Chi­nese en­ter­prises to in­vest over­seas,” Yu said.

Ac­cord­ing to the China Min­ing As­so­ci­a­tion (CMA), Chi­nese min­ing com­pa­nies in­vested in 103 projects over­seas in the first three quar­ters of 2013, 8 per­cent fewer than the same pe­riod of 2012.

In terms of a busi­ness en­vi­ron­ment, Canada has highly de­vel­oped sci­ence and tech­nol­ogy, a ro­bust fi­nan­cial sys­tem and eas­ily ac­ces­si­ble le­gal, fi­nan­cial and in­ter­me­di­ary ser­vices, all of which makes po­ten­tial in­vestors feel wel­come and con­fi­dent.

How­ever, Yu added, “I heard some Chi­nese min­ing com­pa­nies in Canada com­plain­ing that they had in­vested heav­ily in in­fra­struc­ture de­vel­op­ment, la­bor and meet­ing all sorts of stan­dards, while their fi­nan­cial re­turns have been mar­ginal.”

The top con­sid­er­a­tion for Chi­nese in­vestors in Canada is cer­tainly the en­vi­ron­ment for in­vest­ment. But there may not al­ways be ready in­fra­struc­ture on the ground, and could pos­si­bly be la­bor short­ages, high en­vi­ron­men­tal stan­dards and the chal­lenge of prop­erly man­ag­ing re­la­tions with dif­fer­ent so­cial groups, es­pe­cially the First Na­tions, Canada’s Abo­rig­i­nal peo­ples.

“I ad­vise in­vestors to plan care­fully af­ter com­pre­hen­sively study­ing these po­ten­tial con­cerns and adapt your busi­ness well to lo­cal con­di­tions,” Yu told the gath­er­ing.

“We are look­ing for a res­o­lu­tion in the crit­i­cal mo­ment of a mar­ket down­turn and un­der­es­ti­ma­tions and will try to seize po­ten­tial op­por­tu­ni­ties,” said Jin Wen­hong, pres­i­dent of Huakan In­ter­na­tional Min­ing Inc, a TSX-V ex­change-listed com­pany fo­cused on gold and sil­ver.

Ac­cord­ing to Jin, Huakan has been fo­cus­ing on high-tech­nol­ogy co­op­er­a­tion with the Cana­dian min­ing in­dus­try to main­tain long-term de­vel­op­ment. “The com­pe­ti­tion is fierce,” he said, “and it’s not only about the money. Ac­tu­ally, the re­ally good en­ter­prises in Canada are never at a lack for in­vest­ment fund­ing.”

“Don’t be anx­ious to achieve quick suc­cess and get in­stant ben­e­fits,” Jin said. “As a re­spon­si­ble in­vestor, you need to grow to­gether with the en­ter­prise.”

Fol­low­ing Yu, John Gravelle, part­ner of Price­wa­ter­house­Coop­ers LLP, said that Chi­nese in­vestors will con­tinue to dom­i­nate the in­dus­try’s prospects.

“Al­though the mar­ket has lost con­fi­dence in min­ing in­dus­tries, I think we see some good signs to start the year off,” Gravelle said.

Bal­ance sheets re­main healthy and there are lots of op­por­tu­ni­ties in a min­ing in­dus­try down­turn, Gravelle pointed out. “Es­pe­cially the po­ten­tial mar­ket in China is great,” he said. “China will con­tinue to con­sume nearly 40 per­cent of the world’s min­eral prod­ucts.”

“There’s no doubt that ur­ban­iza­tion will be an im­por­tant driv­ing force in the sus­tained de­mand for re­sources,” Gravelle added.

Cur­rently, the ur­ban­iza­tion rate in China is at 52.57 per­cent; the num­ber is ex­pected to reach 60 per­cent by 2020. That means more than 90 mil­lion cur­rent ru­ral Chi­nese res­i­dents will be­come ur­ban res­i­dents, which rep­re­sents a great de­mo­graphic shift and op­por­tu­ni­ties.

“China’s eco­nomic struc­ture is un­der­go­ing a pos­i­tive change,” said Zhong Zi­ran, chief en­gi­neer of the Min­istry of Land and Re­sources of China. “The mo­men­tum of growth in en­ergy and min­eral de­mands pro­vides a good op­por­tu­nity for Chi­nese and global min­ing in­vestors.”

Ac­cord­ing to Zhong, fur­ther co­op­er­a­tion be­tween the two coun­tries in the min­ing sec­tor will help China gain a long-term and sta­ble source of sup­ply.


The ex­hi­bi­tion booth of the Min­istry of Land and Re­sources of China at the PDAC 2014 in Toronto.


Yu Ben­lin, min­is­ter-coun­selor for Eco­nomic Commercial Af­fairs of Chi­nese Em­bassy in Canada, speaks at the China Min­ing In­vest­ment Sym­po­sium 2014 in Toronto.

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