Chinese Companies Drive an Overseas Gold M&A Wave: From Going Out to Belonging

“In the next three to five years, no fewer than three of China's leading gold miners will rank among the world's top ten, leading global gold mining into a Chinese era.”

The remark was made by Duan Lei, General Manager of Zhaojin Mining (01818.HK), at the “Zijin Forum | Gold Mining in Transformation” session of the 2025 (27th) China Mining Conference held in Tianjin.

At present, among the world's top ten gold companies, only Zijin Mining is Chinese.

Duan Lei said his judgment stems mainly from a re-examination of the drivers of globalization in China's gold mining industry: the driving force for Chinese gold mining to allocate resources globally has undergone a fundamental shift, from the traditional economic and industrial drivers to strategic and state drivers.

Since the beginning of this year, international gold prices have risen strongly, repeatedly hitting record highs. As of the latest data, international gold prices have gained more than 50% year to date. On October 16, spot gold briefly broke through US$4,300/oz, surging more than US$1,000 in just two months.

Along with rising prices, the pace of overseas gold M&A by Chinese mining companies has also accelerated.

Policy has also further clarified the direction of development. In June, the Ministry of Industry and Information Technology and eight other departments issued the Implementation Plan for the High-Quality Development of the Gold Industry (2025-2027), which calls for deepening overseas investment cooperation, encouraging enterprises to jointly build the Belt and Road with high quality, integrating into the global gold industry chain and improving the level of multinational operations.

A strategic layout around global gold resources is unfolding in full.

In February this year, Xingye Yinxi (000426.SZ) disclosed an announcement on the progress of its wholly owned subsidiary's outbound investment, noting that the third tranche of 23.9173 million ordinary shares subscribed by its wholly owned subsidiary Xingye Gold (Hong Kong) Mining Co., Ltd. in the private placement of Australian-listed Far East Gold Limited had been settled. This was the company's first overseas mining project.

In April, Zijin Mining (601899.SH/02899.HK) formally completed the acquisition of the Akyem gold mine project in Ghana from US-based Newmont at a price of US$1 billion.

On October 12, Zijin Mining also announced that its controlled subsidiary Zijin Gold International Co., Ltd. (hereinafter “Zijin Gold International”) had completed the closing of the acquisition of the Raygorodok gold mine project in Kazakhstan and now holds a 100% interest in the mine.

With the smooth closing of Raygorodok, the number of producing gold mines under Zijin Gold International has risen to nine.

On October 14, Shengtun Mining (600711.SH) announced that it plans to acquire 100% of the equity of Canada's Loncor for US$190 million (about RMB 1.35 billion); Loncor's core asset is the Adumbi gold mine project in the DRC.

These are just a microcosm of the overseas gold layout of Chinese mining companies.

Li Ying, Senior Analyst of Mining Economics at S&P Global, revealed at the conference that over the past five years Chinese mining companies have spent more than US$2 billion (about RMB 14.226 billion) annually on overseas mining and metals M&A. Because of the fall in lithium carbonate prices, Chinese overseas lithium investment has slowed and shifted toward gold; in 2024, Chinese overseas gold M&A reached six deals worth about US$1.7 billion (about RMB 12.092 billion).

She pointed out that gold prices have pushed up asset values and that mature gold mines are mostly monopolized by international giants, making M&A difficult, but Chinese companies continue to seek overseas expansion.

“Uncertainties remain in the market, but S&P is still optimistic about gold projects at present,” Li Ying said.

As for the reasons behind the growth of overseas M&A by Chinese mining companies, Li Weiming, Director and Researcher of the Resources and Environmental Policy Research Institute of the Development Research Center of the State Council, believes there are at least two factors: corporate strength and the external environment.

In terms of corporate strength, Li Weiming noted that enterprises' technological innovation and their high-end, intelligent, green and safe capabilities are gradually improving; their ability to implement internationalization strategies, which requires the courage of decision-makers and substantial human, financial and soft and hard power support; and their ability to cooperate with resource countries through responsible development, localized operations and differentiated operations, which requires long-term accumulation.

The external environment has also brought a window for M&A. Li Weiming said that, on the one hand, China's practical cooperation in overseas mining has accumulated a good reputation, the government upholds the concepts of equality, mutual benefit and joint construction, and initiatives such as the Belt and Road have created a favorable international atmosphere.

On the other hand, the current external situation is complex, but opportunity lies within crisis. For example, during the pandemic some mining companies ran into problems with their capital chains, and the earlier sharp fall in lithium prices left some companies struggling, providing M&A opportunities for capable Chinese enterprises.

In addition, the mismatch between gold reserves, production and sales forces an overseas layout. Huang Fu, Chief Industry Researcher of Zijin Mining and Director of its Shanghai Representative Office, noted that China is the world's largest gold consumer, consuming 20% of global gold, but its output accounts for only 10% and its reserves only 5%.

“Given the high degree of mismatch among reserves, production and sales, this means that the participation of Chinese gold companies in overseas M&A is the most important measure for promoting the high-quality development of Chinese gold,” Huang Fu said.

However, the overseas M&A path of Chinese mining companies is not all smooth sailing.

Resource nationalism is an unavoidable topic. Zhang Ru, Partner of the Mining and Metals team in Deloitte's Tax and Business Advisory Department, gave an example: in the Guinea Simandou consulting project she participated in, local requirements called for production to be carried out locally and imposed requirements on the number of workers, affecting the original business model.

In addition, the complexity of laws and taxation further increases the difficulty of M&A.

According to Zhang Ru, for example, Chile's royalty is levied on an ad valorem basis; the DRC has an excess profit tax, and Peru is discussing the introduction of a windfall tax. These taxes are independent of ordinary income tax and turnover tax, and there may be differences between practice and theory. Facing these differences particularly tests Chinese enterprises' ability to respond compliantly in advance and to understand specific policies and the positions of local tax authorities.

Mining taxes in some countries also show “regional differences”. Zhang Ru said that for special mining taxes, many countries levy province-related provincial taxes, such as royalties, and that many risks also exist here.

For example, there may be no relevant guidance prices in national tax policy, but some countries and regions may have orally agreed minimum calculation standards or reference prices. If local tax authorities' practical rules are not understood during the early investment decision process, there will be great risks in the calculation process.

Facing the challenges, Chinese mining companies are also actively seeking ways to break through.

“Mining companies can improve the profitability of the entire industry through advance legal and tax analysis, which involves the ESG topic,” Zhang Ru said.

She further pointed out that ESG is not only about whether certain potential expenditures can be deducted, but is also closely related to the final calculation of the tax burden. Many countries link ESG to tax incentives and carbon taxes, and good ESG practices can save costs.

Yang Yifang, President of Chifeng Gold, said at the conference, “When enterprises first went global, they underestimated cultural and community risks, thinking they would be easy to solve.”

In her view, acquisition is only the start of an overseas layout; subsequent integration is the real test, and what it tests is not language but communication skills and whether one has the mindset to respect and understand different cultures and systems. “This is very likely the key to whether a project succeeds.”

Yang Yifang believes it is necessary to understand the demands of communities, governments, employees and other stakeholders, and then translate these demands into costs that mining companies should bear. If they can bear them, they can “get in”; if they also have cross-cultural communication skills, they can “blend in”.

In the view of Zhang Weibo, Director of the Strategy and Information Division of Zijin Mining, resource nationalism should not be a derogatory term but a neutral one. Any resource country has the right to make full use of its own resources to seek welfare for its country, nation and people. Therefore, resource nationalism should not be regarded as a beast of prey but should be accepted; for a considerable period to come, it will be a constant “good friend” of the mining industry.

In addition, talent is also a key focus. Shen Shaoyang, Vice President of Zijin Mining, stressed that in addition to corporate strategic resolve and decision-making, the core of solving all problems in implementation is “talent”. Mining is a global industry, so talent includes not only Chinese people and excellent employees in the host country, but also people from third countries with international perspectives and mining experience.

© 金昂控股集团 · 转载请注明来源 https://www.jinanggroup.com/en/news/BRO0aJ0N.html