China eyes Aust mining assets in Africa

China eyes Aust mining assets in Africa | News | Business Spectator
Chinese companies are eyeing mid-tier Australian mining groups with African operations as a method of obtaining valuable assets in Africa, according to a report by PricewaterhouseCoopers LLP.
PWC global leader mining Tim Goldsmith told Business Spectator that Chinese firms looking to move into Africa are turning to acquisitions of Australian and Canadian firms with holdings in the region.
“In terms of M&A we are seeing a recent trend of Chinese entities seeking control of ASX listed vehicles with African assets, or the ability to spin African assets into these entities," PWC said in the report.
"Chinese companies are increasingly on the hunt for targets that offer in-country experience and relationships with African projects.”
The PWC report found mid-tier mining companies with a market capitalisation of less than $5 billion recorded a 33 per cent increase in revenue to $11.3 billion for the year to June 30, compared to $8.5 billion lasy year.
A 23 per cent surge in metals prices contributed to the rise, as Chinese demand led to increased production and expansion by the mining industry.
“While there is still some uncertainty surrounding the impact of the Minerals Resource Rent Tax (MRRT) the mid-tier remains strong and ready for growth with cash balances accounting for 10 per cent of total assets during 2010, to be in excess of $7 billion,” Mr Goldsmith said in the report.
He told Business Spectator that M&A activity would continue in the industry, but that while this time last year the main driver for consolidation was survival, right now the key driver was growth.
"We always see consolidation in the mining sector and i think that will continue," Mr Goldsmith said.
The report said mid-tier miners are well-poised for growth in the future and many are planning investment into project development and expansion activities.
"While current market conditions suggest short-term volatility will persist, investors should be ready for a return to strength by Australia’s mining mid-tier.”