Investors often pride themselves on being countercyclical, but Chinese conglomerates take this to a whole new level. The current slump in the lithium and nickel markets serves as a testament to their unique approach – while EV demand is on the decline, supply remains high, thanks to Chinese companies’ willingness to invest in less trendy metals and regions.<\/p>\n
A recent example of this unconventional strategy can be seen in the case of Chaarat Gold, a former Aim-traded company that was recently taken over by its debtors. Chaarat’s primary asset is the Tulkubash gold project in Kyrgyzstan, boasting a resource of approximately 1 million ounces of gold. Just before the debtholders gained control of the company, China Railways made a bold move to invest $42 million in the business. This investment included $20 million for a 35% equity stake and a $23 million loan to refinance existing debt at lower rates, far surpassing the company’s market value at the time. Despite the lucrative offer, the board rejected China Railways’ proposal, opting to let the creditors take control of the company.<\/p>\n
So, why the sudden interest in a Kyrgyz mine? China has identified Kyrgyzstan as a key target in its ‘belt and road’ investment scheme, aiming to expand its influence in developing countries globally. This strategic move aligns with China’s successful infrastructure projects in Africa, where the country has built crucial infrastructure utilized by mining companies in countries like the Democratic Republic of Congo and Zambia. Kyrgyzstan’s significant gold exports to China further underscore the importance of the precious metal to the country’s economy.<\/p>\n
The impact of China’s investment style is also evident in the lithium and nickel markets, where Chinese entities continue to flood the market with raw materials, driving prices down. This volume-based approach has created oversupply issues, leading to a mismatch between supply and demand. Despite the risks, Chinese companies have consistently invested in these markets, even when prices were weak, resulting in significant gains when market conditions improved.<\/p>\n
One notable success story is Zijin Mining’s investment in the Kamoa-Kakula copper mine in Zambia, which has seen remarkable growth in value since its acquisition. However, not all Chinese investments have been as lucrative, as seen in Ganfeng Lithium’s acquisition of Bacanora Lithium, which faced challenges following political developments in Mexico.<\/p>\n
In conclusion, Chinese conglomerates’ unconventional investment strategies have reshaped the landscape of the global mining industry. Their willingness to invest in overlooked metals and regions, coupled with their long-term vision, has yielded both successes and setbacks. The impact of Chinese investments on the lithium, nickel, and gold markets underscores the country’s growing influence in the global economy. <\/p>\n","protected":false},"excerpt":{"rendered":"
Investors often pride themselves on being countercyclical, but Chinese conglomerates take this to a whole new level. The current slump in the lithium and nickel markets serves as a testament to their unique approach – while EV demand is on the decline, supply remains high, thanks to Chinese companies’ willingness to invest in less trendy […]<\/p>\n","protected":false},"author":1,"featured_media":727,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[739,696,380,1001,738,1000,417],"class_list":["post-726","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion","tag-attention","tag-chinas","tag-influence","tag-metal","tag-pay","tag-precious","tag-time"],"_links":{"self":[{"href":"https:\/\/chasebelgrave.com\/index.php\/wp-json\/wp\/v2\/posts\/726"}],"collection":[{"href":"https:\/\/chasebelgrave.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/chasebelgrave.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/chasebelgrave.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/chasebelgrave.com\/index.php\/wp-json\/wp\/v2\/comments?post=726"}],"version-history":[{"count":0,"href":"https:\/\/chasebelgrave.com\/index.php\/wp-json\/wp\/v2\/posts\/726\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/chasebelgrave.com\/index.php\/wp-json\/wp\/v2\/media\/727"}],"wp:attachment":[{"href":"https:\/\/chasebelgrave.com\/index.php\/wp-json\/wp\/v2\/media?parent=726"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/chasebelgrave.com\/index.php\/wp-json\/wp\/v2\/categories?post=726"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/chasebelgrave.com\/index.php\/wp-json\/wp\/v2\/tags?post=726"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}