China may have dominated mining news headlines over the past year, but it is a small player when it comes to mergers and acquisitions, according to a report released today from PwC.
The Mining Deals report states that in 2010, just 6% of global mining involved purchases by Chinese companies, compared to 36% from companies domiciled in Canada, 16% in the US and 16% in Australia.
The numbers appear to dispel the myth that China is amassing control of the world's resources by merging and acquiring firms into its orbit.
“The reality is China has been a very active investor in global mining projects in recent years, but its current market share pales in comparison to Canada and other developed countries,” says John Nyholt, National Leader of Transaction Services, PwC. “Chinese-led M&A this decade has been impressive, but consider that Rio Tinto and Xstrata alone have completed more acquisitions during the first 10 years of this millennium than all Chinese buyers collectively.”
The PwC report tracked 713 deals in 2010 that involved a Canadian buyer compared to 161 involving a Chinese buyer. Year-end results bring the decade ended 2010 tally to 400 Chinese deals worth close to US$48 billion, which is considerable given Chinese buyers were negligible players in mining M&A only 10 years ago.
Despite high-profile 2010 deals like Sinopec taking a $4.65 billion stake in a huge Canadian oilsands operation, Nyholt says few Chinese buyers have secured controlling interests in western-owned mining companies. Rather, most projects acquired by Chinese companies have been within China or other Asian countries.
However, Nyholt expects this to change in 2011. The report indicates the Chinese will take a more aggressive approach to M&A in 2011, paving the way for the world’s first Chinese-owned diversified mining powerhouse.