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TORONTO ? Some from the global gold industry is retrenching, one of China’s leading producers continues to eye big global growth.
“We wish to become a global leading company,” George Fang, executive director of Zijin Mining Group Co. Ltd., told a crowd in the Prospectors and Developers Association of Canada (PDAC) conference in Toronto.
It would be a rare public appearance outside China for a Zijin executive, although the firm continues to be making headlines all over the world due to its aggressive expansion strategy.
State-owned Zijin, formed in 1993, continues to be looking abroad for gold and copper acquisitions for more than a decade, but is a very active buyer over just the last few years.
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In December 2014, the organization unveiled an $81 million purchase of Canadian miner Pretium Resources Inc. And in May of last year, Zijin announced two huge investments in Canadian companies. It gave Barrick Gold Corp. US$298 million for any stake in the Porgera mine in Papua New Guinea, and gave Ivanhoe Mines Ltd. US$412 million for any stake within the Kamoa copper project within the Democratic Republic of Congo. Those transactions instantly made Zijin a substantial global player.
The two deals come at a challenging time for Western mining companies to raise capital on favourable terms. Zijin is following within the footsteps of many other Chinese resource firms in the last decade, which took advantage of drops in commodity prices to invest vast amounts of dollars in companies around the globe.
Many of those Chinese firms have run into issues with their overseas investments, partly simply because they have struggled to adjust to business environments outside China. Fang stressed that Zijin wants to study from its partnership with Barrick in order to be a better global company. The two miners plan to co-operate on future investments.
Fang spoke as part of a China-focused session at the PDAC conference. Among the key themes was that Chinese firms have to adjust to the local environments by which they be employed in order to succeed. Michael Laffin, a partner at Blake Cassels & Graydon LLP, said they ought to concentrate on retaining and empowering good local employees, delegating some authority and upholding best practices from our country.
“Tackling the cultural issues is critical,” he explained.
While Zijin is better known outside of China for its acquisitions, it has faced a lot of criticism inside the country for its environmental practices. Especially, it had been blamed for a massive toxic spill this year that reportedly released more than 9,000 cubic metres of acidic waste right into a river.
pkoven@nationalpost.com
Twitter.com/peterkoven
