China leads worldwide mining and metals buys

China was the world's most acquisitive nation in mining and metals in 2012 and is expected to continue to lead merger and acquisition (M&A) activities in the sector in 2013, underscoring its counter-cyclical investment strategy, a report by a leading global consulting firm showed Tuesday.

China saw 147 mining and metals deals completed worldwide in 2012 with a total value of $21.7 billion, accounting for 21 percent of the total global deal volume of $104 billion in the sector, global consultancy Ernst & Young said in its report.

It made China the most acquisitive nation in the sector in terms of value, it said.

The increase in Chinese outbound M&A activity, despite slowing global and domestic economic growth, is indicative of China's counter-cyclical investment strategy and the country's need for resource security in the long term, the report said.

China will continue to be a leading counter-cyclical buyer around the world to take advantage of increased divestments by larger miners in 2013, according to the report.

"There are an increasing number of large-scale, low-cost expansion projects being pursued in underdeveloped mining and metals markets where significant infrastructure development is required," Eleanor Wu, a partner in transaction advisory services at Ernst & Young, said at the release of the report.

"As a result there are growing opportunities for Chinese mining and metals companies to add value as strategic partners supporting infrastructure development," Wu said.

Wu also noted that the difficult time that Chinese steel companies experienced in 2012 would not change fundamentally but supply and sales would gradually improve from 2013 as the economy improves and Chinese steel makers continue to pursue M&A overseas, lowering the cost of raw materials such as iron ore.

"2012 was the worst year for the Chinese steel industry due to overcapacity in the industry compounded by high raw material costs and low ex-factory prices," Wang Guoqing, research director at Beijing Lange Steel Information Research Center, told the Global Times Tuesday.

"As infrastructure investments accelerate in the year, supply and demand will gradually balance, and demand may even exceed supply in the second half of the year," Wang said.