China Outbound Mining Investment Trends: Hanking International, Pengxin International, Thomson Reuters, Zhejiang Huayou Cobalt

The panel kicks off with an overview of the past year and a discussion on where Chinese outbound investment stands now. George Fang, Executive Vice Chairman of Zhejiang Huayou Cobalt notes there there is strong outbound investment and that despite the COVID-19 pandemic in 2020, Chinese outbound investment still stood at USD$ 132.9B, which represents a 3.3% increase from 2019. In 2021, he expects to see recovery coming more strongly and the outbound investment will continue to grow. Jiawen Hou, Investment Manager at Pengxin International agrees that the market has been positive since the middle of 2020 and as we’re at the start of a commodities supercycle, she expects this trend to continue for the next decade. She also notes that this being the kick-off year for China’s 14th 5-year plan, we can expect to see more policy-driven new development trends which will be beneficial for the mining industry. Greg Pan, President and CEO at Hanking Industrial Group adds that through the pandemic many major players have remained active in acquisitions and predicts that overseas investment will accelerate once we’re clear from COVID-19.

Industry analyst Clyde Russell, who is Asia Commodities & Energy Columnist at Thomson Reuters, paints a positive picture from the past year. The fact that Chinese investment went up in 2020 is quite amazing despite it being one of the worst years the global economy has ever seen. He notes two strands to Chinese outbound investment in the commodities space: the first is in acquiring assets for things they think they’ll need in the future (that they might be short of) and the second is where they export their expertise, equipment, and ability to build bridges with neighbouring countries. The first strand is really focused on diversifying supply (especially around strategic commodities), while the second strand is to further develop the belt & road type projects.

The fact that Chinese investment went up in 2020 is quite amazing despite it being one of the worst years the global economy has ever seen

With regards to the growing theme of decarbonization and ESG, our panellists note the growing influence of decarbonization, on the investment side of the industry and on the mining side. Chinese companies have been putting a lot of work into their ESG standards and improving their image across the board, focusing on sustainable development, green mining, social responsibility, governance, and more. Hou notes that in some of the areas where they operate in Africa, where the power supply is not always necessarily stable, their efforts on renewable energy development help them to be more sustainable overall and is better for their operations as it can reduce their reliance on the local grid. Clyde describes how we’re looking at looming supply shortages as decarbonization requires massive amounts of metals. And since these metals are more readily found in more risky jurisdictions, it is typically Chinese companies that may be more willing to put up with these risks in order to get to these metals. There’s a delicate balance of being an ethical miner and working in jurisdictions where this may not be so easy.

Panellists:
Greg Pan, President and CEO, Hanking Industrial Group Ltd.
Jiawen Hou, Investment Manager, Pengxin International Clyde Russell, Asia Commodities & Energy Columnist, Thomson Reuters
George Q. Fang, Executive Vice Chairman, Zhejiang Huayou Cobalt Co., Ltd.

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