Monterrico Metals, a small London-based mining company, looks set to become the first LSE-listed company to be acquired by Chinese interests.
The prospective buyer
of Monterrico is a consortium of Chinese industrial groups, according
to the Daily Telegraph, which describes the bid as “another watershed”
in China's economic development, as it underlines the country's
intention to buy up overseas companies in strategic industries.
The mining sector is probably as strategic as you can get as far as
China's resource-hungry economy is concerned, particular if the
commodity being mined is copper — China imports about 70% of all the
copper it uses.
Monterrico principal focus is the Rio Blanco copper mine close to
Peru's border with Ecuador, which has the potential to become one of
the world's 10 largest copper mines, but needs a lot of investment.
Enter the deep-pocketed consortium, led by China's biggest gold
miner, Zijin Mining Group, which has made a £95m offer for the British
The deal is the latest in a series
of low-profile but substantial purchases of overseas mining assets by
Chinese companies, and comes at a time of growing disquiet in the west
at China's newfound desire to flex its muscles in the commodity
industries. Until now China has played a largely passive role and
willingly paid top dollar for the raw materials it needs to keep its
ravenous economy fed.
Now however China is looking to exert more influence on producer
nations, particularly those in emerging markets, presumably in the hope
of locking in to more favourable long-term supply deals.
This week, President Hu Jintao, on an eight-nation African tour,
offered a multi-million dollar investment package to copper-rich
Zambia, where Chinese companies have spent billions of dollars
developing the mining sector.
However, the Telegraph notes that China's
thirst for raw materials has led to accusations of “commodity
imperialism”, particularly in Africa, where China is accused of trying
to exploit Africa's abundant natural resources with little regard for
the human or environmental impact. Much like the west did in decades
More on China's latest rapprochement with Africa in this Financial Times article. While this
FT article looks at the flip-side — the problems facing the handful of
South African companies that have tried to invest in China.
As well as brewer SABMiller, a pioneer in China, the article mentions Sasol, whose coal-to-liquid technology was described in this earlier EngagingChina article. Apparently, Sasol is still waiting to get the go ahead for its CTL project.