How large has been the scale of overseas mergers and acquisitions by Chinese mining companies during the financial crisis? According to recent statistics released by EY, the scale of M&A deals over the past 10 years has exceeded 50 billion U.S. dollars, with the past two years accounting for 80% of the total over the entire decade. In other words, in 2008 and 2009 alone, Chinese companies’ overseas mining M&A deals reached as much as 40 billion U.S. dollars. Wu Zhengxi, Managing Partner in charge of Overseas M&A Services at EY China, emphasized that this assessment is based on a thorough understanding of client situations and statistical analysis.
According to statistics provided by EY, in 2009, the global mining and metals industry completed a total of 1,047 M&A deals with a transaction value of 60 billion U.S. dollars. Approximately 44% of these acquisition targets were located in Australia, the United States, or Canada. In particular, China’s M&A deal volume in the mining and metals sector in 2009 reached 16.1 billion U.S. dollars, accounting for 27% of the global total for this industry.
“This trend will continue in 2010,” said Wu Guoqiang, Managing Partner in charge of the energy and chemicals industry at EY China, expressing optimism about this year’s M&A market. However, he noted that, unlike the past two years, this year mining companies’ M&A deals may shift from direct controlling stakes to partial equity participation.
??? Wu Guoqiang believes that over the past year, the financial crisis has led to a depletion of financing channels for many foreign mining companies and a decline in commodity prices, creating favorable conditions for Chinese enterprises to pursue overseas mergers and acquisitions. Wu Zhengxi noted that, following the global financial crisis, the market remains highly sensitive to various signals emanating from China’s economy, which will result in continued volatility in commodity prices and asset values, making the transaction environment even more challenging. She pointed out that in 2010, global M&A deals in the mining and metals industries are expected to remain active.