Industry insiders believe that, in the near term, prices of key consumer metals such as copper and iron will likely remain sluggish. Coupled with the high degree of monopoly held by mining giants, the best option for Chinese enterprises may be to... “ small ” Acquire small-scale mines and take over small enterprises.

　　After experiencing robust demand from China, the global mining industry has entered a winter period—whether it’s mining giants like Rio Tinto and BHP Billiton or... FMG Such a rising star enters 2013 The year, more or less, saw financial issues arise. “ Demand recession ” Become 2013 Mining and Wealth ( Beijing ) High-level Forum ” The consensus among attendees is that, for Chinese companies and investors, now seems to be an excellent opportunity to snap up overseas mineral assets at bargain prices.

　　Industry insiders believe that in the near future, prices of major consumer metals such as copper and iron will likely remain sluggish. Coupled with the high degree of monopoly held by mining giants, the best option for Chinese enterprises may be to... “ small ” Acquire small-scale mines and take over small enterprises.

　　Whether continuing to acquire bulk commodities such as iron and copper or focusing on niche products, Chinese companies’ overseas M&A risks have not diminished despite the cooling market conditions—and the assets of international giants... “ Sale ” Whether it offers good quality at a low price remains to be clarified.

　　 “ Gloomy ” Mining

　　2008 The mining boom driven by the massive demand for base metals resulting from China’s high economic growth over the past several years has come to an end. 2013 In the first two quarters of last year, mining giants Rio Tinto and BHP both replaced their CEOs, and the underlying reason in both cases was a significant decline in corporate profits.

　　The data shows that, currently, compared to... 2010 By year-end, the market capitalization of major global mining companies typically declines by as much as... 30%~40% ，2012 The net profit of the world's major mining companies compared to... 2011 Year-on-year decline 40%~80% 。

　　Meanwhile, mining mergers and restructurings worldwide have also significantly contracted. 2012 Number of global mining M&A deals annually 1803 Zong, relatively 2011 of the year 2605 Zong, down more than 30%。2012 Annual M&A Amount 1100 hundreds of millions of dollars, compared to 2011 of the year 1490 hundreds of millions of dollars, a decline of more than 26% If we exclude the value of Glencore and Xstrata... 540 The merger, worth hundreds of millions of dollars, actually saw a decline of... 62.4% 。

　　Wang Jionghui, Assistant to the President of China Minmetals Corporation 6 Moon 18 Participate on the day 2013 Mining and Wealth ( Beijing ) During the summit forum, he stated that the global mining industry has entered a winter period—but in his view, it’s actually a... “ Warm winter ”。

　　Now, the mining industry has entered an era where cost is paramount. Major mining companies around the world are making strategic adjustments—shifting from massive investments to cost control, asset sales, and expense reductions. 2013 Cumulative financial write-downs of major mining companies in the first half of the year 330 100 million yuan.

　　For example, Rio Tinto in 6 Moon 13 The company just acquired its high-quality nickel mine in the U.S. with 3.25 Sold to Lundin Mining for hundreds of millions of dollars; industry insiders believe this price is relatively low compared to the mine’s actual value.

　　And from CRU( British Institute of Commodities ) The report indicates that BHP will divest up to... in the coming years. 350 hundreds of millions of dollars in non-core assets ( Information from Deutsche Bank )。 “ We believe that the non-core assets here refer to those parts of the business other than our core operations, such as iron ore and copper mines. CRU Senior analyst Liu Zhenzhen told a reporter from the China Business News that iron ore and copper prices are still expected to decline over the next two to three years, while smaller commodities such as lead, zinc, and potash still offer opportunities.

　　Meanwhile, BHP has put on hold. 800 The plan to expand iron, copper, and coal production capacity by hundreds of millions of U.S. dollars will not include new investments in aluminum and nickel for the time being.

　　However, reporters have learned that the contraction by international mining giants is relative— their core businesses have not been reduced. For example, Rio Tinto continues to invest this year. 42 The company is expanding its iron ore business by hundreds of millions of dollars, while at the same time shifting its investment focus toward future scarce resources such as oil, natural gas, potash, and shale gas.

　　Demand Puzzle

　　Since the beginning of this year, prices for copper, aluminum, zinc, lead, and iron ore have remained persistently low. Market analysts attribute this to a significant release of production capacity. Indeed, data provided by industry insiders support this conclusion. 2000 year to 2011 This year, global copper mines have seen only new capacity additions. 170 Ten thousand tons, but... 2011 year to 2015 The globally confirmed new production capacity reached... 350 Ten thousand tons, with additional new mine capacity planned for the future. 370 Ten thousand tons.

　　However, according to mining market insiders, demand plays a decisive role. In their view, there is often a significant gap between the increase in supply as reflected in figures and the actual supply available in the market. “ The current downturn in the mining industry is not caused by an increase in supply, but by insufficient demand. ” Pan Guocheng, President and CEO of China Hanwang, believes that many planned projects have been delayed due to unpredictable factors such as disasters and strikes.

　　Data shows that large-scale iron ore projects are currently under exploration and construction worldwide. 261 units, reserves 2118 Hundred million tons ; China is exploring and building large- and medium-sized mines. 66 units, reserves 200 Tens of billions of tons ; From 2013 year to 2018 In the year, several major iron ore-producing countries outside China collectively added over... 9 100 million tons.

　　However, 2012 China's iron ore imports reached... in the year. 7.2 hundreds of millions of tons, Wang Jionghui said, if calculated based on... 7% of the GDP Growth rate calculation, to 2015 In the year, China's demand for iron ore was... 14 Around 100 million tons.

　　Former Australian Ambassador to China, Gareth Evans, believes that China's... GDP Growth rate slows down 7% It's equivalent to 10 Before the New Year 10% because the base for development has increased significantly. He believes that in the future... 20 In the coming years, the world’s demand for resources and energy will be what it is today. 4 To 5 Moreover, China's external demand will be very strong.

　　 “ If Chinese companies can further reduce costs, today’s iron ore prices will still represent a highly profitable commodity. ” A leader from the steel industry association, who asked not to be named, told reporters that the seller’s market for iron ore has not changed, and even if iron ore prices do fall, there isn’t much room for further decline.

　　Radical timing ?

　　In the eyes of investors, buying mining stocks is like buying stocks— it’s hard to buy at the bottom. Moreover, even within the industry, there’s little consensus on the global mining sector’s current situation.

　　 “ China’s demand is rigid, and coupled with the U.S.’s robust recovery and the EU’s exit from its debt crisis, the winter for the mining industry will soon be over. ” Wang Jionghui called on Chinese entrepreneurs to seize the current favorable opportunity and boldly venture overseas to acquire mining assets.

　　Weng Yuying, Managing Director of China Citic International Asia Ltd., believes that it’s still too early to be certain, but we can take a look. “ If everyone were pessimistic, then everyone would be pessimistic. The fact that there are still people who aren’t pessimistic means the market hasn’t yet reached its bottom. ”

　　Weng Yuying told the reporter that, compared to... 2008 Compared to previous cycles, this round of economic downturn was triggered by the government’s earlier bailout measures and is now beyond remedy—only a natural market recovery can bring about a turnaround. While the U.S. economy’s trend toward recovery is generally positive, the slowdown in Chinese demand will put an end to the high profits in the mining sector. “ China and the U.S. have different economic structures. China is the largest buyer of bulk commodities and raw materials, yet the mining industry still remains profitable. ”

　　Tong Jinhu, General Manager of the Overseas Division of China Gold Group, told reporters that the company will step up its efforts to acquire mining assets overseas. He believes that now is the time... 2008 A great acquisition opportunity following the financial crisis of the year, “ Not only gold, but also other mineral resources. ”

　　However, Wang Jionghui believes that although the mining sector won't cool down for long, the new growth areas in the future will be smaller mineral resources such as uranium, rare earths, potash, and phosphate. According to forecasts by China's National Development and Reform Commission, China's phosphate reserves have a remaining mineable lifespan of only... 20 Year, while potash is currently in short supply.

　　Regarding Wang Jionghui’s proposal “ small ” From the perspective of the times, many mining investors disagree, arguing that MCC’s viewpoint—viewing issues from the standpoint of a state-owned enterprise—does not reflect the actual situation of overseas acquisitions as a whole.

　　 “ I don’t think it’s a good choice, even though we ourselves have invested in phosphate fertilizer projects. ” Lu Wei, a partner at Lianchuang Investment, which has extensive involvement in gold mining, told our reporter that potash and phosphate fertilizers are closely linked to agriculture, and their downstream buyers tend to be relatively monopolistic. The upstream-downstream relationship is crucial—otherwise, there would be no channels to sell the products. “ Right now, many foreign potash and phosphate mines want to sell their products to China—they just can’t handle it themselves. ” Lu Wei believes that when pursuing overseas M&A, it’s still important to focus on what you’re good at and enter familiar fields.

　　Although the global mining industry... “ Entering winter ” Generally regarded as Chinese enterprises going global. “ Buy the dip ” a good time, but reporters found that Chinese companies, compared to... 2008 The optimism around the turn of the year has been tempered by a bit more caution. Several entrepreneurs interviewed said that before going global, they would carefully assess both risks and rewards and take into account a wide range of uncertain factors in a comprehensive manner.

　　Tong Jinhu pointed out that, over the past few years, Chinese companies have been very active in overseas mergers and acquisitions. “ However, the risk assessment conducted before the merger and acquisition was insufficient. 70% To 80% It was a failure, with heavy losses and exorbitant tuition fees. ”