As the world’s largest metal consumer, the second largest economy in the world, and the largest funder of overseas metal projects, China’s impact on the mining business globally cannot be overstated. That’s why Canadian miners have been playing close attention to recent political and economic developments involving China.
Three key stories have characterized the first half of the year. Firstly, Canadian businesses are seeing the effects of the new investment restrictions the government implemented last year, requiring ministerial approval on Chinese investments in the Canadian mining sector.
Alongside these new restrictions on inbound Chinese investment, Canada’s traditional allies have been courting Canada as they look to “friend-shore” their supply chains and diversify away from China. Finally, the underwhelming economic rebound following China’s reopening has reduced the Chinese import of metals writ large. These political and economic trends have changed the investors available to Canadian miners and softened demand in the world’s biggest metal consumption market.
Chinese investment falls
We have seen a decline in Chinese investment in Canadian metal firms as a result of the worsening Sino-Canadian relationship. However, politics is not the only factor behind the drop off. It’s also part of a larger slowdown in Chinese dealmaking over the last several years.