"Gold is the most active type in the overseas M&A market. From 2014 to 2017, the global gold mine M&A market was gradually active, with the annual M&A number climbing rapidly to the peak and returning to the previous high in 2021. The second variety is copper, which shows a similar trend as gold. And new energy metals, with the rapid development of new energy vehicles in 2016, the demand for cobalt and lithium continues to increase, the price continues to rise, driving the M&A market heating up." Zhu Yi said.
China is a big country in the production of global mining resources, but the cost of production is high due to the low resource endowment. At the same time, China is also a big consumer of mining resources. In order to ensure the security of resources and meet the growing demand, Chinese mining enterprises have "gone out" one after another.
On the whole, China's OFDI has developed steadily, with flows jumping 123 percent in the decade from 2010 to 2020, and the secondary industry accounting for 21 percent of the total OFDI stock, with mining accounting for 31 percent of the total, Zhu said.
Chinese companies have made overseas acquisitions in South America, Australia, North America, Canada and Africa, according to Zhu. From the perspective of M&A targets, there are both single mines and corporate mergers and acquisitions, and the trend of overseas mergers and acquisitions will continue with the growth of China's mining demand.
Judging from the current situation of mining development, Zhu Yi introduced that mining is a capital-intensive industry. With the large-scale resource development in recent decades, the mining depth and difficulty of major mines in the world are gradually increasing, and the ore grade is also gradually decreasing. The mining industry is faced with many difficulties, such as resource depletion, water resource limitation and increasing mining complexity.
Mr Zhu points out that the average mine life from discovery to delivery is now four years longer than in the past, with a total time of nearly 14 years, while larger and more complex mine projects can take longer.
"We expect that as global carbon reduction moves forward, green demand and the need for clean energy will push miners to expand existing mines and open new ones, which will require miners to finance." Zhu Yi pointed out that mining enterprises mainly adopt corporate funds, equity financing, debt financing and alternative financing according to different business needs.
Zhu Yi, said of the four types of financing, equity financing including private sale and open market sale, in which private sale is very popular in the field of mining investment, especially the junior mining companies, by private sale to large corporations, not only can get the money, also be able to get some of the things like production technology of foreign relations and support, and for a large company, It is also possible to lock in part of the revenue at a small cost in the early stage of the project.
On the one hand, it can raise a relatively large amount of funds by selling in the open market. On the other hand, the capital market provides a market-oriented pricing for the enterprise, which is conducive to improving the visibility of the enterprise and making use of the capital market for subsequent financing.
"However, the threshold for public market offerings is high and only at a certain stage can companies with a good profit model consider it. However, due to the long period and high risk of mining development, it is difficult for companies in the exploration and development stage or small volume to go public in many countries." Zhu Yi said.
Zhu Yi introduced that Canada and Australia have relatively loose listing conditions and accept unprofitable mining companies to go public for financing, thus becoming a major financing destination for global mining enterprises. The number of listed mining companies in Canada is the largest, but most of them are small and medium-sized mining enterprises, with the total market value ranking the third. The number of listed mining companies in China is only about 16% of that in Canada, but because the listed companies' business covers mining, smelting and downstream processing, with a large scale, the market value exceeds that of Canada and ranks the second. Benefiting from Australia's unique resource endowment in mineral resources, Australia's listed mining companies have the highest market value.
