China at the top of Australian M&A

A new report has found that China accounted for two thirds of Australian mining merger and acquisition deals in 2009.

China’s place as the most important international partner to Australia’s resource sector has been reaffirmed by a new study that shows around two thirds of Australia’s US$10.6 billion in mining merger and acquisition deals in 2009 came from the emerging economy.

According to The Australian, the report from financial institution Ernst & Young found that the top 35 deals in the Australian mining sector involved foreign companies, leaving only 7% of deals done locally.

China did US$7.2 billion worth of deals, the report said.

The results were a marked contrast from the previous year when three of the four largest deals in the mining industry were completed by local players, with only 13% coming from China.

Despite the increase in Chinese merger and acquisition deals, global mining investment fell by more than half in 2009 to around US$60 billion from US$126.9 billion in 2008.

The peak of the mining boom saw record investment levels of US$210.8 billion in 2007.

Coal and gold dominated the increased Chinese investment in 2009, highlighted by Yanzhou Coal’s $3billion takeover of Felix Resources.

The increased Chinese investment results come at the same time Nationals Senator Barnaby Joyce has called for tougher investment regulations on Chinese interests hoping to buy into Australian companies.

Joyce told the ABC last night that if he were to become finance minister he would advise the Foreign Investment Review Board to more closely scrutinise the motivations behind investment by state-owned companies.

“I would be far more stringent…if I thought they were shelling out markets and you were getting vertical integration,” he said.

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