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China invested $4.5 billion in foreign mining assets 01.08.2016 at 13:30

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the Chinese companies have stepped up buying of foreign mining companies up to $4.5 billion mainly they are interested in copper and gold, the geography of the most significant transactions in Africa and Latin America. To the Russian market the Chinese are treated with caution and major purchases here yet don't do.

Chinese investors are buying up mining assets outside of their country. For the first half of 2016, Chinese companies and funds acquired from foreign mining assets in the amount of approximately $4.49 billion, which is 18.2% higher than in the same period last year ($3.8 billion).

Over the past half year, Chinese investors and not spent a record $8.7 billion in 22 deals on purchasing mines and mills in the outside world.

This is more than four times more than the United States, who took second place in the ranking by volumes of cross-border transactions for the purchase of mining assets, the report said the consulting company Baker & McKenzie.

the share of companies from the Asia-Pacific region accounted for 70% of all cross-border transactions carried out over the past year and a half.

"In the past half of China's interest in the extractive sector is back. It now includes high-technology minerals and non-ferrous metals", — concluded the head of the Department of mining in Baker & McKenzie John Mollard.

the Mining sector has bottomed, the report says, and this fact has attracted global investors hoping to take this opportunity to buy assets at the best price.

"China has always been interesting development in the mining segment. Recently, this market was quite large volatility, metals prices fell and the availability of acquisitions grew," said BCS analyst Kirill Chuiko.

the Most attractive to Chinese investors were deposits of such metals as copper and gold, and also in General non-ferrous metals.

the biggest cross-border deal in the mining sector with the participation of Chinese investors was the acquisition of a copper mine Freeport-McMoRan in the Congo, for which the Chinese company China Molybdenum paid $2.65 billion, She purchased the Brazilian Deposit of niobium and phosphates in the international mining conglomerate Anglo American for $1.5 billion.

a Major transaction for the gold assets was the purchase of Chinese Sichuan Railway Investment Group (SRIG) of copper and gold deposits in Australia almost $300 million.

Chinese investors moved away and the Jamaican bauxite-alumina complex Alpart, previously owned by Russian steel UC Rusal. The buyer was a Chinese company Jiuquan Iron & Steel (Group). The transaction value amounted to $299 million.

the Interest of Chinese investors to copper is that this metal China is experiencing some deficiency. In copper, China's low self-sufficiency," — said Chuiko. In the first half of 2016, China imported 4.67 million tons of this metal, which is 22% more than in the first six months of 2015.

as for gold, it is a traditional object of investment, especially for investors from countries with developing economies. Fueled interest in gold mining assets and gold prices in global markets: January 2016 yellow metal has risen almost 25%, to $1314 per ounce.

Directly on the Russian market, China has also carried out a number of small transactions. For example, the consortium of Chinese investors Highland Fund, which included leading companies in China, bought 13,33% in the project "Norilsk Nickel" for the development of the Bystrinskoye copper-iron-gold Deposit in the Zabaykalsky Krai. The amount of the transaction amounted to $100 million the CEO of Norilsk Nickel Vladimir Potanin in March did not rule out a further increase in China's share down to 20%.

the Development of deposits of manganese ores in the Republic of Khakassia will be engaged in the Chinese company Sinosteel Engineering & Technology. The agreement was signed between the government of the Republic, the Russian company "Chek-su" and China's Sinosteel last week.

But in General, Chinese companies are cautious when looking for the Russian mining sector as an investment.

This is due to the fact that Chinese investors pay special attention to the presence of agreements at the state level and without them are ready to carry out investments in emerging economies.

In General, the reason for Chinese companies and investment funds are buying up mining assets, is the desire of China to ensure stable and predictable supply of raw materials.

"the Constant availability of raw materials for China remains a priority," said Chuiko.

the Area of their interests — the countries of Africa and Latin America — is due to the fact that investment in these economies involve risks of political instability. Investors from developed economies are usually not willing to take risks, says the analyst. This lowers the value of those assets in the market that attracts Chinese investors.

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