A record wave of consolidation in China’s mining industry is creating bigger companies that will have the muscle to compete with the likes of BHP Billiton Ltd. (BHP) for overseas acquisitions.
Even after Chinese domestic mining mergers reached $19.6 billion last year, double the tally for 2011, the government wants to see more. Easier access to capital and less Chinese competition for assets may make companies including China Minmetals Corp. and Aluminum Corp. of China more robust overseas buyers, said Deloitte & Touche LLP.
That’ll help reverse a slump in acquisitions of mining assets outside of China, which fell to a five-year low of $2.9 billion in 2012, data compiled by Bloomberg show. As the world’s biggest importer of iron ore and coal, China relies on foreign sources of the raw materials.
China’s mining industry, while one of the world’s largest producers of minerals including gold and tin, is now peppered with thousands of smaller companies. Minmetals, its largest miner by revenue, had assets of $36.6 billion at the end of 2011 — dwarfed by BHP’s $122.1 billion, according to data compiled by Bloomberg.
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