Chinese companies urged to take measured approach to Canada mining investment

Keith Spence (left), president of Global Mining Capital Corp and chairman of PDAC International, speaks at a panel discussion during the 2017 Chinese Mining Investment Forum on Monday in Toronto. NA LI / CHINA DAILY

China has vast market potential due to its great demand for mining resources, while Canada has one of the largest stock markets in the world, which plays a leading role in international prospecting and exploration of mining resources.

However, many deals by Chinese companies in mining and energy projects are losing money, running into unexpected costs or generating significantly less output than expected.

"China's mining companies need mining projects with high grades," said Luan Zhengming, a committee member of the CMA.

Spence offered three suggestions to Chinese investors: Focus on projects with lower risk; the financing structure should reflect the risk appetite; and manage and mitigate the soft risks.

"You certainly have to give up something which means you don't control it and you have to trust your partners," said Pletcher, of National Mining Group. "We started to see more Chinese investors approach it this way, like with Western Potash. He said CNOOC's (China National Offshore Oil Corporation) initial investment was restructured with minority interests and off-take.

Canada's strong financial markets also help ease investment in the country.

Pletcher said Canada is the leading global centre for mining finance. The Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSX-V) were home to 1,207 public mining companies as of 2017.

"Canada's government welcomes Chinese investors; what we value as much as the investment is the partnership that Chinese companies bring to Canada," said Canadian Senator David Wells, who represents Newfoundland and Labrador provinces.

"The field of energy minerals is the focus of China's investment in Canada, with the gradual rebounding of the mining industry," said Xia Xiang, minister-counsellor for economic & commercial affairs at the Chinese embassy in Canada.