China’s overseas investment in metals and mining set to hit record

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China’s metals and mining investments abroad are on monitor to hit a document this yr, new information exhibits, because the nation races to safe assets to defend its place because the world’s largest producer of electrical autos, batteries, photo voltaic panels and wind generators.

Within the first half of this yr, Chinese language investments and new contracts within the mining and metals sector topped $10bn, in line with a report from the Inexperienced Finance & Improvement Middle at Fudan College in Shanghai reviewed by the Monetary Occasions. That determine is greater than the 2022 full-year complete, and places this yr’s investments on monitor to exceed the earlier document of $17bn in 2018.

China’s funding within the sector consists of nickel, lithium and copper tasks in addition to uranium, metal and iron, highlighting intensifying efforts by Chinese language firms throughout the clear expertise provide chain to lock up entry to assets amid forecasts of booming long-term demand because the world fights local weather change.

The investments, which have spanned nations in Africa, Asia and South America, additionally replicate President Xi Jinping’s ambitions of financial self-reliance as he seeks to fortify China in opposition to the influence of rising geopolitical tensions with the US.

“Total, China’s BRI [Belt and Road Initiative] engagement appears to change into extra strategic, in regard to each financial and industrial points: extra bankable tasks related for China’s and the host nations’ industrial growth,” mentioned Christoph Nedopil, director of the centre at Fudan College.

As soon as touted by Beijing because the “undertaking of the century”, the Belt and Highway Initiative was launched in 2013 providing nations a substitute for western-led financing for infrastructure tasks similar to roads, railways, bridges, ports and airports.

Xi’s hallmark transnational infrastructure funding programme in the end drew in 148 nations and has surpassed $1tn in cumulative tasks, whereas endowing Beijing with a potent supply of diplomatic affect.

Fears over China’s financial leverage have prompted dozens of nations, together with Italy, to evaluation their BRI involvement lately, whereas China’s bailout lending has ballooned following a collection of debt write-offs, scandal-ridden tasks and allegations of corruption linked to the BRI.

Whereas the BRI’s international footprint has shrunk lately, the assets sector has confirmed a uncommon shiny spot. Beijing’s strategic drive to safe uncooked supplies has additionally accelerated alongside the event of a sprawling home processing sector, additional lowering its reliance on abroad refiners for metals together with copper, aluminium, lithium and cobalt.

The Fudan College information, launched on Tuesday, additionally confirmed that within the first half of 2023, investments as a share of BRI engagement reached a document 61 per cent, marking the primary six-month interval that building contracts accounted for lower than half the worth of recent BRI financing.

Whereas the dimensions of BRI offers has proportionally contracted, Chinese language personal firms have elevated funding, selecting up among the shortfall from state-owned enterprises that characterised the scheme’s bold earlier years.

Nedopil added that altering threat evaluations by Chinese language buyers and banks meant that new BRI financing was targeted on revenue-generating and resource-backed offers, which additionally benefited metals and mining, relatively than building contracts and infrastructure.

Extra reporting by Harry Dempsey in London

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