In recent years, public opinion both domestically and internationally has increasingly reinforced the view that, over the past period, Chinese mining companies’ overseas investments have experienced a remarkably high failure rate. As one foreign institution pointed out, the failure rate of Chinese enterprises’ overseas mining investments is... 42% , in comparison, the global average is 32% ; Some reports indicate that the failure rate of Chinese companies' overseas mining investments is as high as... 80% Even 95% It was also reported that the Chinese metals industry accounted for the largest share of the total amount involved in failed overseas investment projects. 27% , second only to the energy and power industries.

This viewpoint—and the various interpretations derived from it—has already had a negative impact on policies supporting China’s mining industry “going global.” As a result, state-owned mining enterprises have become less enthusiastic about making overseas investments, investment by geological exploration units has virtually come to a standstill, and financial institutions and partners have lowered their credit ratings and valuations of related companies, leading to an increase in investment premiums.

Although a small number of Chinese mining companies have stepped up their overseas mining investments, overall, the share of China’s overseas mining investments is declining. According to statistics from the Ministry of Commerce, 2015 In China, foreign investment in the mining sector accounted for a certain percentage of total foreign non-financial direct investment. 8% , and 2016 The first half of the year accounted for only 4.7% The pace of China’s mining sector’s globalization is slowing down, which is unfavorable for China’s mining industry, given its persistently high dependence on imports. To change this situation, we must objectively assess the current state and future prospects of China’s mining sector “going global.”

It’s unwise to draw premature conclusions about overseas mining investment projects.

When assessing the success or failure of a mining project, at a minimum, one mining cycle should be observed—and in some cases, the entire lifespan of the mine must be taken into account before a definitive conclusion can be drawn.

Currently, most studies exploring the reasons behind the failures of China’s “going global” mining initiatives tend to take for granted the aforementioned view that investment failure rates are high. These studies focus primarily on analyzing specific causes on a case-by-case basis, yet they largely fail to reflect critically on the validity of this very premise itself. While numerous factors have been identified—such as the disadvantages of being a latecomer, vicious competition, volatile policies in host countries, and challenges related to labor, environmental protection, and community issues—these analyses still fall short of providing comprehensive solutions for how to reverse this unfavorable situation. We believe:

The high failure rate of overseas risk exploration projects has driven up the overall failure rate of overseas mining investments. Given the lack of transparency in China’s overseas mining investment data, coupled with differences in statistical timing and scope—such as the number of projects, the number of companies involved, the value at stake, and the statistical stages (e.g., exploration, development, and mergers and acquisitions)—as well as variations in criteria for determining failure, it is extremely difficult to accurately calculate the failure rate of China’s overseas mining investments. However, we believe that the currently estimated exceptionally high failure rate is largely attributable to the inclusion of the failure rates of overseas risk exploration projects in the statistics.

The success rate of global risk exploration projects is only... 1% Left and right. And each 1000 Of the many mineral exploration target areas, only one will ultimately become a mine. Over the past decade, the failure rate of risk exploration projects has been on the rise. 2005 Years ago, exploration expenditures changed in proportion to discoveries, but... 2005 Since the year, exploration investment has increased. 10 times, but exploration findings have remained consistently stable, indicating that the discovery rate per unit of exploration expenditure is declining. Globally, exploration companies generally face high failure rates. Over the past decade, Australian junior exploration companies have... 80% It’s a loss-making endeavor. If we calculate the failure rate of China’s overseas mining investments by combining exploration projects with mining and M&A projects, we’ll inevitably conclude that the vast majority of China’s overseas mining investments have failed—a conclusion that is clearly subjective and unobjective.

Overseas mining investment projects cannot be judged solely on short-term outcomes. It would be subjective to evaluate the success or failure of a mining project by focusing on just one particular period. Take, for example, China’s Shougang’s iron ore mine in Peru. 1992 At the beginning of the year, Shougang Corporation offered a price nearly above the reserve price. 6 Bidding twice the amount, I purchased shares in Peruvian Iron Ore Co., Ltd. 98.4% the shares and their affiliated entities 670.7 The permanent rights to mine, explore, and operate a mining area spanning 10,000 square kilometers. Since then, the project has been mired in difficulties due to issues such as community concerns and labor disputes. After years of perseverance under various pressures both domestically and internationally, 2005 Since the sharp rise in iron ore prices this year, Shougang Bimeng Iron Ore has begun to emerge from its difficulties. In the acquisition... 13 After the year, 2006 Starting this year, we will be returning rebates to the headquarters. 1993 The balance of various financial debts accumulated since the year. 942 The million dollars was processed and completed in the same year, becoming one of Shougang Corporation’s primary sources of profit.

A mining cycle typically lasts more than a decade. Discovering a mine and entering the extraction phase (the lead-up period) usually takes... 15 Around the year. Mining projects typically take several more years to reach the break-even point. Large-scale mines can usually be exploited for decades—or even over a century. Generally, there are four key criteria for evaluating the success of a mining project: safe and reliable operations throughout implementation and startup; achievement of commercial objectives with on-time and within-budget handover; fulfillment of expectations from both customers and shareholders; and competitiveness in terms of capital costs and planned execution when compared with global peers. If these criteria are used to judge the success or failure of a mining project, at a minimum, one mining cycle should be observed—and ideally, the entire mine’s lifespan—before a definitive conclusion can be drawn. Currently, the global mining industry as a whole is in a downturn, with many mines either operating at a loss or temporarily shut down. As of... 2015 By the end of the year, globally more than 65% The coal mines are operating at a non-profit level; nearly half of India’s mines are currently closed; the iron ore belt in Minnesota, USA. 11 The iron mine has closed. 7 As long as there’s still a glimmer of hope, we shouldn’t conclude that various mining projects overseas—many of which are still struggling hard—are doomed to fail.

Mining investments objectively do carry high risks.

Even global mining companies like BHP, Australia’s largest mining firm, cannot escape the inherently high systemic risks associated with mining projects. ; In recent years, the increasing investment in mining projects—and the resulting heightened confrontation—has further escalated risks.

Mining investments involve systemic high risks. Mining projects face a variety of risks—such as global governance challenges, sovereign risks, adjustments in government policies, technological advancements, and the substitution of mineral resources—that enterprises cannot fully anticipate. Take the selection of mineral types as an example. 2008 Around the turn of the year, some Chinese companies “going global” identified bulk minerals such as coal and iron ore as their key mineral resources. Yet in less than a decade, global climate change agreements have led to restrictions on coal production and use in certain countries, and some financial institutions have stopped providing financing for coal projects. As a result, energy sources like lithium mines and geothermal energy have become hot topics. 2016 Year 8 In the month, Australia’s largest mining company, BHP, announced that, due to factors including misjudgments of ore deposit value, the dam failure in Brazil, and declining commodity prices, as of this year... 6 In the last fiscal year ending at the end of the month, the company’s annual loss reached 64 A historic high of hundreds of millions of dollars, exceeding market expectations for a loss. 58 hundreds of millions of dollars. Even global mining companies like these cannot escape the inherently high systemic risks associated with mining projects.

High investment leads to intense competition, further escalating risks. In recent years, as investment in mining projects has increased, the number of stakeholders involved—and the degree of conflicting interests—has also risen, placing ever-higher demands on management. The higher the investment in mining projects, the greater the likelihood of failure. According to the Australian Chamber of Commerce, in that country... 650 mineral, oil and gas, and chemical projects in the past 15 An investigation into the operational status over the past year, 2007 Years ago, few costs were involved. 20 Projects exceeding A$100 million, but... 2012 At least annually 10 The capital expenditure for the project exceeds. 100 hundred million Australian dollars. More than 20 The failure rate of capital investment projects worth hundreds of millions of Australian dollars exceeds... 60% Such projects not only pose risks to the projects themselves but also pose risks to the entire country’s industries. Canada has taken action in response to this. 2007 The government has specially established a Major Project Management Office this year to facilitate coordination among government agencies on these projects. Additionally, the concentrated investment by Chinese enterprises in overseas mining projects has led to heightened antagonism, thereby increasing the associated risks.

The global mining industry is facing a shared unfavorable situation.

From a global perspective, the mining industry still faces many non-market factors. , For example, geopolitical factors, insufficient and asymmetric information, the concentration and monopolization of mineral reserves—most of these factors are beyond the control of individual enterprises and require support from the state or even solutions at the global level of mining governance.

Non-market factors pose widespread obstacles. The global mining investment environment is riddled with non-market conditions that individual mining companies are simply unable to manage on their own. It is perfectly reasonable, in a free-market context, to evaluate the success or failure of mining projects purely on economic grounds. However, from a global perspective, the mining industry still faces numerous non-market factors—such as geopolitical considerations, information asymmetry and inadequacy, and the concentration and monopolization of mineral reserves. Most of these factors are beyond the control of individual enterprises and require solutions at the national level or even at the global governance level for the mining sector. For China, which finds itself at a disadvantage under international rules and suffers from significant shortcomings in public goods related to information and research, evaluating the success or failure of enterprises—especially state-owned enterprises—solely through market logic is at best incomplete.

Resource nationalism is on the rise across the board. After undergoing historical phases—including colonialism, nationalization, and openness—global mining has become increasingly internationalized. 2005 In recent years, we have entered a historical period marked by the resurgence of resource nationalism and the parallel development of resource globalization. Many Western multinational mining companies experienced rapid growth during the opening-up phase at the end of the last century, thanks to the well-developed factor markets that enabled them to secure prime mineral deposits. By contrast, China, after entering its fourth phase, has embarked on large-scale overseas expansion, facing relatively greater resistance and challenges.

The diversification of perceptions regarding resource value has driven up costs and risks. On the one hand, over the past two decades, an increasing number of value claims—from global environmental conservationism and even extreme environmental conservationism, to human rights protectionism and cultural preservationism—have entered the mining sector, significantly intensifying the burden of corporate responsibility. On the other hand, countries have not provided corresponding institutional compensation to mining projects, such as reductions in mining taxes and fees; as a result, mining companies have to some extent become a vulnerable group. According to statistics, capital investment... 30 hundreds of millions of dollars～ 50 A mining project worth hundreds of millions of dollars incurs weekly costs as high as [amount] due to community conflicts in the mining industry. 2000 Tens of thousands of U.S. dollars—this is something unimaginable in other industries. It’s a challenge that mining companies worldwide are facing together, far beyond the capacity of any single mining company or even the home country of its investors to tackle on their own.

China’s overseas mining investments are still in the learning phase.

China’s large-scale “going global” in the mining sector has only a history of about ten years, and this move was made under conditions characterized by a “latecomer disadvantage.” The world’s largest... 40 Among mining companies, China accounts for... 12 At least in terms of scale, Chinese mining enterprises have already achieved impressive results.

Although some Chinese enterprises have been rapidly expanding overseas, Chinese mining companies’ “going global” efforts as a whole are still in the early stages, making them latecomers to international mining investment.

China’s mining industry is just beginning its journey of transnational operations amid the “latecomer disadvantage.” Multinational mining companies from countries such as Canada, Australia, the United States, and the United Kingdom have already accumulated over a century of experience in transnational operations. By contrast, China’s mining sector has only been actively “going global” for about a decade—and even then, it has taken this step under conditions marked by the “latecomer disadvantage.” Compared with multinational mining companies from countries like Japan, India, South Africa, and Russia, China’s mining industry is still in the learning phase when it comes to transnational operations. According to PwC’s latest research report, the world’s largest... 40 Among mining companies, China accounts for... 12 Home. At least in terms of scale, Chinese mining companies have already achieved impressive results.

The challenges arising from cultural and institutional differences will take time to overcome. For example, when it comes to labor practices, Chinese companies—guided by longstanding habits—are more inclined to hire employees who are willing to work tirelessly, diligent and patient, and highly productive. In contrast, in local contexts, low wages and poor working conditions might be perceived as a lack of commitment to local employment or even as violations of the law. The profit-target decomposition management approach adopted by Chinese enterprises is often seen as short-sighted and inflexible. China’s emphasis on community contributions through the construction of physical infrastructure is frequently dismissed as mere “face-saving” projects. Moreover, the subtle and indirect language used by Chinese companies during negotiations is often interpreted as a sign of unclear thinking. All these cultural and institutional differences require time to be resolved. In fact, both the Chinese government and businesses are gradually gaining a deeper understanding of each other’s cultures, enhancing communication, and making appropriate adjustments. Overseas, there has been quite positive commentary on China’s overseas mining investments; indeed, some Western media have even begun to highlight the experiences of Chinese mining companies in securing community support.

International rules governing mining governance need to be gradually familiarized with. As Chinese mining companies “go global,” they must integrate themselves into the broader environment of mining governance. However, most Chinese mining companies are still unfamiliar with international governance rules relevant to the mining sector—such as international labor standards, international human rights standards, international environmental standards, international anti-corruption standards, and international counterterrorism standards. For example, Chinese mining companies have relatively limited experience in engaging with international non-governmental organizations, and most have not yet joined the Extractive Industries Transparency Initiative (EITI). EITI ) International Mining and Metals Association ( ICMM ) and so on. These shortcomings all require Chinese mining companies to gradually become familiar with them and make corresponding adjustments.

We still need to continue supporting the mining industry's "going global" efforts.

In the next mining cycle, China may still face other challenges. We will continue to need to adopt diversified approaches to ensure resource security. Going global—and ensuring the diversification of our “going global” efforts—is an inevitable choice.

During the last mining boom, China paid a heavy price for high-priced mineral products such as iron ore. China’s “going global” strategy in the mining sector has largely been driven by considerations of resource security. The underlying significance lies in ensuring that China secures a reasonable and safe investment share throughout all stages of global exploration, mining, and related activities—enjoying the benefits of low-cost development when resource prices are low and reaping the rewards from mining enterprises when resource prices rise, thereby safeguarding China’s overall resource security. This is the original intention behind China’s “going global” approach in the mining industry.

Although China’s economic growth has slowed down today, from the perspective of its dependence on foreign markets for mineral resources and the ratio of reserves to production, resource security remains a pressing issue. Moreover, in the next mining cycle, China may face additional challenges. We must continue to adopt diversified strategies to ensure resource security. “Going global” and ensuring diversification in our “going global” efforts are inevitable choices.

From a strategic perspective, we need to adopt a broader vision and provide more comprehensive support for Chinese mining companies as they go global. In the previous round of large-scale “going out” by Chinese mining enterprises, support was provided at multiple levels—including diplomacy, finance, financial services, and information services. Today, China’s mining sector continues to face similar global and domestic circumstances. At the same time, compared with the previous cycle, Chinese mining companies going abroad now face several new challenges. For instance, there is growing competition between ecological interests, multi-use land development, and resource exploitation; an increasing number of trade and investment barriers in developing countries and regions such as Africa; and the subtle manipulation of global markets by countries with absolute resource advantages, driven by their own national interests.

Countries such as Canada, Australia, and the United States continue to provide ongoing subsidies to the mining industry—either by subsidizing domestic mining operations to strengthen corporate competitiveness or by directly supporting overseas mining investments. Take Australia as an example: each year, the federal and state governments together provide cumulative mining subsidies totaling several... 10 hundreds of millions of Australian dollars; in addition to preferential support policies for domestic exploration and mining, Canada has adopted direct measures—including financial, insurance, and diplomatic initiatives—to encourage overseas investments by mining companies. Moreover, Canada provides financial assistance to support mining law reforms in developing countries, safeguards corporate investments through bilateral and multilateral agreements, and conducts due diligence with state-funded resources, among other approaches.

In this context, if the Chinese government does not provide support to mining enterprises—especially exploration companies—it will be extremely difficult for these companies to sustain their operations. Moreover, over the past two years, the level of support China has provided for its overseas mining investments—in terms of both diversity and intensity—has fallen significantly short of that offered by the home countries of other competing nations.

At the same time, it is necessary for us to reflect on the approach we took in supporting the previous round of China’s “going global” mining initiatives. At that time, the lack of a robust regulatory and accountability framework, coupled with insufficient corporate capabilities and experience, led to a large number of blind, low-quality, and overpriced overseas mining investments. After so many years of rich experience with China’s “going global” mining strategy, we now have the capital—and the perspective—to engage in such reflection.

In short, to fully understand the current situation and future prospects of China’s overseas mining projects, we need to move beyond simplistic assessments of success or failure. Instead, we must adopt a strategic perspective, employ multidimensional viewpoints, and take a historical approach—while also accounting for the unique characteristics of the mining industry. Only by doing so can we help all relevant parties重新 recognize the significance of China’s mining enterprises going global, enabling these companies to cast off burdens and conventional perspectives and move forward steadily.

(Author’s Affiliation: Information Center of the Ministry of Natural Resources)