China, unfazed by failures to invest in Rio Tinto Group and Unocal, will boost spending on oil and mining acquisitions by at least half this year to take advantage of lower valuations after commodity prices slumped.
State-owned Yanzhou Coal Mining has agreed to buy Australia’s Felix Resources for about A$3.5 billion ($2.9 billion).
China National Petroleum Corp.’s plan to buy Repsol YPF SA’s Argentine unit may push Chinese purchases of overseas commodity assets to $43 billion this year, a 48% increase on 2008.
Jim Rogers, chairman of Rogers Holdings said, “The Chinese don’t have enough nickel, don’t have enough oil, and they don’t have enough copper. There’s a crisis coming. They are going around the world buying up what they can. They’re preparing for a rainy day.”
Bids for resources by China, whose $2.1 trillion in currency reserves are the world’s largest, have been met with opposition in the U.S. and Australia. Neither concern over its growing influence nor the arrest of four Rio executives in Shanghai have stopped Chinese companies from buying assets abroad as the nation’s RMB4 trillion ($585 billion) economic stimulus spurs demand.
Chinese energy companies have spent at least $13 billion on overseas assets since December as they take advantage of lower valuations caused by the slowdown.
Blooomberg reports that such opposition as that from the lawmakers in Australia and perhaps in Spain will be overcome simply by higher bidding.