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1、Potential Impact of Chinese Investment on the Canadian Mining SectorLo-Sun Jen, Ph.D. Minerals and Metals Sector Natural Resources CanadaA presentation at the FOCAL Conference Session on The Economic and Political Impact of Chinese Foreign Investment in The Americas: A Canadian perspectiveCrown Plaz
2、a Hotel, Ottawa February 10, 20061Introduction A brief overview of the mineral relations between Canada and China Why China is interested in investing in mining in Canada Current Chinese mining investments in Canada and impact Pros and cons of potential impact of Chinese mining investment in Canada
3、How to protect Canadian mining interests in Canada and China 2A Brief Overview of the Mineral Relations between Canada and China In 1970, Canada and China established diplomatic tiesIn 1976, first Canadian mining trade mission to China In 1988, first Canada-China MOU on cooperation in minerals and m
4、etals In mid 1990s, China launched definitive economic reform towards an open market economyIn 1998, Chinas Ministry of Land and Resources (MLR) was formed and serious mining reform began in China In 1999, the first China Mining (a policy conference) was launched and invited international input to C
5、hinas mining policy reform, with Natural Resources Canada (NRCan) calling for gold liberalization and improvements to Chinas investment climate for foreign investmentIn 1999, NRCan began training of MLR mining officials in cooperation with Queens University to help expedite mining reform in ChinaIn
6、2002, China officially encourages Chinese mining investment abroad and the first Canada-China Mining Investment Forum was held in Toronto3China currently consumes-22% of the worlds output of copper -23% of the worlds output of aluminum -16% of the worlds output of nickel -50% of the worlds output of
7、 steelDemand from China for key base metals is rising by more than 20% a year due to its rapid economic development and growth. It is widely known that China has shortages of copper, nickel, iron ore, uranium and potash. Due to demand for minerals and metals continues to outpace domestic mine develo
8、pment and production, China is now increasingly relying on imports of all major industrial minerals and metals including zinc, which China leads the world in production. Current mining investment scene between Canada and China-Canadian mining companies in China (with JV): 100 -Chinese mining related
9、 investment in Canada: 3Chinas Need for Mineral Development and Investment Abroad 4What Attracts Chinese Mining Investment to Canada?Canada is mineral-rich, especially nickel, copper, zinc, lead, uranium, iron ore, potash, and metallurgical coal Canada has advanced technology and management know-how
10、 Canada has favorable investment climate -A fair and transparent fiscal and regulatory regime -Competitive taxation -Allows 100% foreign ownership in mining, except for uranium -Mining rights and mining rights transfer guaranteed -Foreign investors are treated as equal members of the business commun
11、ity, and enjoy both the rights and benefits and obligations and responsibilities -Allows full availability and access to all published international standard information and statistics on minerals and metals and geosciences data -World leader in equity financing for mining companies -Well defined en
12、vironmental process and standards -Fair and consistent project approval process and procedure -Land access and security of tenure -No import or export restrictions5Why It Took So Long for Chinese Mining Investment to Come to Canada? Some MisconceptionsGlobal competition-Cheaper or closer investment
13、projects elsewhere -e.g. Africa, Indo-China, South America, AustraliaCanada has been viewed as a high cost country-Mineral properties expensive -High labour cost -labour relations complex -High transportation costs due to long distances -high living costs -high taxes -long and severe winter weather
14、adds further to costs and shipment delays Canadian tax system considered complex-3 levels of government taxation and complex tax rules -3 types of tax rate Too many jurisdictions and regulations in Canada to deal with if investments span beyond one province 6Current Chinese Mining Investment in Cana
15、daThere were no Chinese mining investment in Canada before 2005In 2005, three mining related investments took place - two in oil sands (bitumen sands or tar sands) mining and one in gold and silver mining:(A) Oil sands mining-In April 2005, China National Offshore Oil Corp. (CNOOC) acquired a 1/6 in
16、terest in Calgary-based MEG Energy Corp. for $150 million. -In May 2005, SinoCanada, a unit of Chinas Sinopec Group, agreed to pay about $105 million for a 40% interest in Calgary-based Synenco Energy Inc.s Northern Lights oil sands project in Alberta. - The move advances the $4.5 billion project, located near Fort McMurray.7Current Chinese Mining Investment in Canada contd(B) Gold mining- In August 2005, The
