Risk Evaluation Of Overseas Mining Investment Based On Grey System Theory

After the 18 th National Congress of the Communist Party of China,with the promotion and implementation of the Belt and Road strategic conception proposed by the Central Government,the step of Chinese enterprises’ going out and participation in international mining investment will be made larger and more steadily.However,as Chinese enterprises are not familiar with the local laws and regulations of resource countries,mining investment and information are not symmetrical,operation experiences about international mining projects are insufficient,etc.,the proportion of failed China’s overseas mining investment is relatively high,and the facing investment risks show systematic and complicated tendency,which has led to a huge loss to the nation and enterprises.Against this background,in this study,on the basis of analysis and summary of foreign investment risk investigation of scholars at home and abroad,appropriate risk assessment methods were explored,the level of mining investment risk of resource countries was quantitatively assessed,and avoidance strategies were explored aiming at existing problems and their reasons.The study is mainly to systematically summarize the historical evolution and development process of global mining investment and “going-out” of Chinese mining enterprises,to analyze the advantages and basic risk types and constitution of mining investment in the Five Continents;accordingly,to analyze risk assessment index system and select typical resource countries,calculate the risk factors of resource countries,and classify and order risk levels,proposing countermeasures and suggestions,like intensifying top planning,forming brand intermediary agents,establishing financing platforms,setting up reserve funds,establishing “reinsurance system” and “foreign mining investment risk monitoring and early warning system”,and paying attention to potential risks.The study methods adopted mainly include literature collecting,dynamic analysis,DELPHI,AHP and grey correlation measure methods.On the basis of grey system theory,using AHP and GRA methods,an AHP-GRA risk assessment model was established for foreign mining investment,expert questionnaire and index weight marking tables were independently designed,and typical national mining investment environment data were selected for model calculation to obtain mining investment risk factors of individual countries and performing classification and ordering.Throughout the status of risk investment research of scholars at home and abroad,it is known that with booming of overseas mining investment,studies focusing on foreign mining investment risks have become more and more,and related assessment theories have also become more mature.However,the following characteristics and deficiencies are commonly present: 1)studies foreign investment risks are more and on subdivision of foreign mining investment risk fields are less,and study depth is low;2)in foreign mining investment risk fields,studies on mining equity merger andacquisition risks are more and on the common characteristics of investment types of the whole industry chain are less;3)most of models adopt a single qualitative or quantitative method,and rarely adopt a qualitative and quantitative combined method;4)in literatures adopting a qualitative and quantitative combined method to establish models,there are minor amounts of literatures considering foreign mining investment process as a half-symmetric grey system and adopting a grey correlation measure method to establish a model.Existing analysis models adopt AHP or SPSS methods,etc.,and require massive amounts of samples,and the calculating results cannot be free of affects from subjective factors;5)among literatures which discuss establishing foreign mining investment risk analysis using grey system,most literatures focus on the economic technical evaluation of microscopic mining projects,and minor on risk factor research of macroscopic mining investment of resource countries;6)risk research on Chinese foreign mining investment risks are mostly concentrated in 2008~2012 when Chinese enterprises were carrying out foreign investment.Since the great depression of global mining in 2013,foreign mining investment risks show new characteristics,but related research has not been performed timely and shows a lag tendency.The research on mining investment risk factors of three typical resource countries,i.e.,Australia,South Africa and Indonesia,indicates that Indonesia is at a high risk level,South Africa and Australia are respectively at a relatively high risk level,and Australia is slightly lower than South Africa in terms of investment risk;mining investment risk is not the common feature of the countries and regions with the poorest investment environment,instead the countries with huge resource potential and most mining investment projects.After 2013,global mining activities became sluggish,and Chinese foreign mining investment,particularly the volume of merger and acquisition(M&A)investment decreased greatly,mining investment downturned,energy minerals and metal minerals investment diversified,and Li,P,Co,Cr,Ir and other products related to new energy and material became new favorites.As deeply affected by geopolitical layout and economic development variation,global mining investment environment has also changed.Nationalism over new resources has turning more still and concealed from the original strong state on confrontation.Foreign mining investment risks changed with the characteristics of times.Some resource countries decreased the access threshold of mining investment,improved mining investment environment to attract investment,issued a series of restrictions on run-of-mine ore extraction and purchase,increased resources tax or restrict Chinese investment enterprises in a more concealed and target mode by enhancing environmental protection standards,so as to reach the purposes of extending industrial chain,increasing local jobs,stimulating local economy,recycle resource generation cost and maximizing local resource benefits.Therefore,if mining enterprises are not familiar with investment environment like laws and policies,and risk characteristics of the target resource countries,they will also fail in the countries with favorable investment environment,and suffer from economic loss.This study is initiative and characteristic in the following seven aspects: 1)Narrowed the study objective,focused on the macroscopic mining investment environment risks of resource countries,and did not consider microscopic risk factors of a single project’s or company’s internal decisions.2)Explored investment chain;not only restricted to equity merger and acquisition,but statistical data also contain various investment forms of the whole industry chain,like exploration,M&A,small amounts of participation,cooperation,mining,processing and operation.3)Expanded data source,and eliminated subjective factors at a high limit.In this study,when the index weight was determined,DELPHI and 1-9 scale methods were used to collect data,the AHP method was used to perform one-time varied weight processing on the risk characteristics of typical resources countries;besides,in terms of data selection,this study is not only limited to expert assignment grading,but also comprehensively referred to investigation data of World Bank,World Economic Organization,Transparency International,World Trade Forum,Commission on Global Governance,China Export & Credit Insurance Corporation and China Mining Association,etc.,to objectively assign the various index weights of investment risks of resource countries to a maximum degree.4)Selected more appropriate study methods,and introduce dgrey system theory.Combined with engineering management theories,foreign mining investment was considered as a grey system with half-symmetric information,a AHP-GRA foreign mining investment risk assessment model was established,which better resolved problems like minor foreign data samples,low availability and wrong second-hand information.5)Selected new study perspectives.The action of Chinese foreign mining investment was put in the whole development history of global transnational mining investment to explore the historical evolution;the advantages and risk characteristics of mining investment among Asian,African,American,Oceania and European regions were systematically compared and studied.6)Summarized new trends and predict new risk points.Investment characteristics and trends of the international mining low-tide period were continuously traced;according to the times background of global mining economic development,new characteristics and trends of Chinese foreign mining investment risks were analyzed and summarized,the mutual relationships with world economic development were traced,thus to more precisely fine investment failure reasons and propose refined avoidance strategies.7)Independently established a investment environment risk assessment model and index system for typical countries.According to the capital flow and project characteristics of foreign mining investment of Chinese enterprises,three typical resource countries,i.e.,Australia,South Africa and Indosinia,were selected,and the AHP-GRA riskassessment index system comprising 27 indexes was independently designed,and the mining investment risk factors of the aforementioned countries were calculated,and then classified and ordered,and comprehensively evaluated;accordingly,seven countermeasures and suggestions were proposed.The risk assessment model established in this study can be used to quantitatively assess the risk level of mining investment in foreign resource countries;this model is practical for the Chinese Government to issue the Overall Evaluation of World Mining Investment Environment via the China Mining Congress and Expo,and is of certain practical guidance significance to the foreign mining investment risk assessment of Chinese enterprises.