• 3 hours U.S. Oil Production To Increase in November As Rig Count Falls
  • 5 hours Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 7 hours Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 9 hours EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 11 hours Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 11 hours Aramco Says No Plans To Shelve IPO
  • 3 days Trump Passes Iran Nuclear Deal Back to Congress
  • 3 days Texas Shutters More Coal-Fired Plants
  • 3 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 3 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 3 days Chevron Quits Australian Deepwater Oil Exploration
  • 4 days Europe Braces For End Of Iran Nuclear Deal
  • 4 days Renewable Energy Startup Powering Native American Protest Camp
  • 4 days Husky Energy Set To Restart Pipeline
  • 4 days Russia, Morocco Sign String Of Energy And Military Deals
  • 4 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 4 days China Set To Continue Crude Oil Buying Spree, IEA Says
  • 4 days India Needs Help To Boost Oil Production
  • 4 days Shell Buys One Of Europe’s Largest EV Charging Networks
  • 4 days Oil Throwback: BP Is Bringing Back The Amoco Brand
  • 4 days Libyan Oil Output Covers 25% Of 2017 Budget Needs
  • 4 days District Judge Rules Dakota Access Can Continue Operating
  • 5 days Surprise Oil Inventory Build Shocks Markets
  • 5 days France’s Biggest Listed Bank To Stop Funding Shale, Oil Sands Projects
  • 5 days Syria’s Kurds Aim To Control Oil-Rich Areas
  • 5 days Chinese Teapots Create $5B JV To Compete With State Firms
  • 5 days Oil M&A Deals Set To Rise
  • 5 days South Sudan Tightens Oil Industry Security
  • 6 days Over 1 Million Bpd Remain Offline In Gulf Of Mexico
  • 6 days Turkmenistan To Spend $93-Billion On Oil And Gas Sector
  • 6 days Indian Hydrocarbon Projects Get $300 Billion Boost Over 10 Years
  • 6 days Record U.S. Crude Exports Squeeze North Sea Oil
  • 6 days Iraq Aims To Reopen Kirkuk-Turkey Oil Pipeline Bypassing Kurdistan
  • 6 days Supply Crunch To Lead To Oil Price Spike By 2020s, Expert Says
  • 6 days Saudi Arabia Ups November Oil Exports To 7-Million Bpd
  • 6 days Niger Delta State Looks To Break Free From Oil
  • 7 days Brazilian Conglomerate To Expand Into Renewables
  • 7 days Kurdish Independence Could Spark Civil War
  • 7 days Chevron, Total Waiting In The Wings As Shell Mulls Majnoon Exit
  • 7 days The Capital Of Coal Is Looking For Other Options
Alt Text

Busting The Lithium Bubble Myth

Lithium demand continues to grow…

Alt Text

World’s Biggest Miner Prepares For The EV Boom

The world’s top mining company…

Chinese Make Aggressive Move In High Risk Mining Assets

Chinese Make Aggressive Move In High Risk Mining Assets

Definitely a theme in the news this week: the continued resource dominance of China.

Despite all the concerns the last couple of years about a China slowdown, data emerging for 2016 shows very strong Chinese resource demand. Evidenced by surging copper exports out of Latin America, and rising oil shipments from Russia.

But perhaps the most interesting China item was BHR Partner's $1.14 billion buy-in to the Tenke copper project in the Democratic Republic of Congo. A move notable for a number of reasons.

First, it's one of the biggest private equity buys we've seen out of China for resources. Yes, there have been some huge mining and energy purchases by Chinese state companies. But this is different -- representing private money, sourced dominantly from within China but also with foreign capital in the mix.

Even more important is the location of the deal. With BHR stepping into an African country that's viewed by many international operators as a challenging place to do business.

It's almost assured that DR Congo would be outside the comfort zone for more-traditional Western private equity. But BHR seems to have no problems buying in here.

Part of that may be the deal structure. With the fund investing alongside major miner China Molybdenum Co -- and reportedly receiving financial guarantees from that company, perhaps softening the risk of losses due to political instability.

Or it may simply be that Chinese investors have a more pragmatic view of the world. Being willing to go where the opportunities are.

And that could make such investors transformative for the global mining industry.

As I've discussed in the past, Western mining private equity has been struggling the last few years. With several high-profile funds unable to deploy billions in capital raised from investors.

A big part of that failure comes down to jurisdiction. With many of these funds reportedly considering only acquisitions in "safe" mining countries like Canada, Australia and perhaps Mexico.

That creates a very skewed market. There are only so many good mining projects globally -- and even fewer that fall within the borders of the world's go-to mining nations. And the fact that so many investors are looking at the same spots means bidding is likely to be intense for any possible acquisitions that do come up. Related: The Oil War Is Only Just Getting Started

The obvious solution is to step out geographically. But that's a strategy few private equity groups can pull off, due to strict covenants -- official or unofficial -- on their political risk profiles.

This week's news suggests China's BHR has no such qualms. Potentially signaling a new kind of mining private equity investor emerging -- the high-impact buyer, searching for big projects wherever they may fall on Earth.

Recent reports suggest that China's Power Capital is preparing a $3 billion mining fund -- which would be the largest on the planet. And that big cash pool could have the same global scope that BHR is demonstrating.

Chinese buyers are almost certain to be more comfortable with Asian projects. And Africa is definitely on the table. Even jurisdictions like the Stans might get considered, given strong Chinese business connections in many of those countries -- places Western private equity would never greenlight.

That's great news for project developers in spots a little outside of the geographic mainstream. And could be very good for Chinese PE investors -- who can benefit from China's strong political influence in accessing quality projects with little competition.

We'll see if the Power Capital fund gets done, and if more PE investors start popping up in the Chinese resource space. If so, there could be a major shift coming in the M&A profile of the global mining sector.

Here's to far-away capital.

By Dave Forest

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News