Despite increasing mining industry mergers and the slowing down of acquisitions, there are still many opportunities for Chinese companies to further expand and with this in mind China Mining 2013 in Tianjin will include a Junior Mining & Exploration Investment Forum. It will provide organizing members of overseas junior mining and exploration projects to meet with Chinese investors.
Hosted by the Ministry of Land Resources, Tianjin Municipal Government and China Mining Association, the 15th China Mining Conference and Exhibition will be held from November 2-5 at Tianjin Meijiang Convention and Exhibition Centre.
In the current international market, junior exploration companies with their high flexibility, rapid implementation of prospecting and financing capacity in risk capital markets, are playing an increasingly important role in exploration. In recent years, 80% of important discoveries are made by junior mineral exploration companies.
Exploration requires a great deal of capital investment but many exploration companies do not have steady operating results or stable cash flows. It may even be the case that the only major property they own is their exploration rights. The problem of financing for junior exploration companies is the toughest issue currently faced in the international mining market.
Exploration investment is unable to finance itself though traditional financing methods. Due to the high-risk of outbound mining investment, it is always difficult for overseas exploration activities to obtain commercial financing. In the context of the economic downturn, financial institutions want to get high-quality assets, so unless the company's project is very competitive, financing proves very difficult to obtain.
Currently global mining capital markets have suffered severe losses, whether in Australia, Canada or South Africa, and the financing of mining enterprises is in deep difficulty. China Mining Association vice president Wang Jiahua says the market value of overseas exploration companies and mining companies has been severely diminished, with most companies falling by about 70% and some by 90%.
However, Chinese investors continue to show interest in overseas mining investments. It has been 10 years since the implementation of China’s ‘going out’ strategy and during this time China has accumulated rich experience in overseas mining investment.
Different types of financial institutions will also participate in the forum, outlining new financing opportunities. The global economic downturn and resulting tight capital markets have brought more opportunities for Chinese enterprises to invest overseas.