Increased demand for lithium, cobalt, and nickel used in electric vehicle batteries
As geopolitical tensions rise and Western countries, including the United States, strengthen their control over major mineral resources, China is turning its attention to Africa.
On the 21st, China’s Caixin Global reported that participants in the China Mining Conference held last week strongly recommended Africa as an alternative investment destination despite poor infrastructure and difficult business environment.
“Chinese mining and infrastructure companies will be able to leverage their strengths to support mining investments in African markets,” said Qi Ding, an analyst at China International Capital (CICC), a Chinese international financial investment firm. “We can overcome the inefficiencies,” he said.
Cheng Jun, a partner at Zhongrun Law Firm, said some African countries have revised their mining laws in recent years. He said the revisions are likely to have little impact on mining investment for the time being, as they are focused on taking better advantage of rising overall raw material prices rather than strengthening control over local mineral resources.
“Africa is worth the risk,” said Zhang Weibo, a researcher at the China Geological Survey’s International Mining Research Center. “There are risks everywhere, but most of them are related to costs. “If profits remain even after considering these risks, it is a favorable investment environment,” he said.
About 30% of the world’s mineral reserves are located in Africa. According to the United Nations Environment Program (UNEP), Africa has the world’s largest deposits of cobalt, diamonds, platinum, and uranium.
As China’s booming new energy vehicle industry increases demand for lithium, cobalt and nickel, key metals used in electric vehicle batteries, Chinese companies are seeking to find mining assets around the world.
However, the United States and its allies Canada and Australia are facing a difficult situation. These three countries have strengthened mining investment regulations to reduce dependence on Chinese imports of raw materials essential for the green transition.
Bo Xiaochuan, director of China’s Zijin Mining Group, pointed out that it is almost impossible for a Chinese company to acquire a Canadian company that focuses on mining “critical minerals” such as copper, lithium, cobalt, nickel, rare earths, and graphite. It is difficult for Chinese companies to even invest a minority stake in these companies.
Sun Xiaoyang, vice president of Zijin Mining, explained that mining transactions are usually carried out in powerful countries such as Canada and Australia, making it difficult for Chinese companies to acquire mining assets. Canada and Australia said they had tightened investment requirements by increasing cumbersome procedures, but left room for Chinese miners to negotiate to make the deal successful.
Director Bo suggested investing in global gold resources because no country has yet designated the precious metal as an important mineral.
Last June, Zhaojin Mining completed a deal worth about $500 million to acquire Australian gold producer Tietto Minerals. In August, Sanjin Gold completed the acquisition of 100% of the shares of Osino Resources, a Canadian gold company.
Reporter Park So-won [email protected]
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