Analysis Of Overseas M&A Risk For Chinese Mining Enterprise

Economic development in China has entered into the Heavy-Industrialization, consuming large amounts of mineral resources is the characteristic of Heavy Industrialization. China’s limited resources can not meet the need for rapid economic development. M&A has become important ways and means to participate in the international mineral resource redistribution. In this context, many enterprises in china are actively seeking opportunities for investment in overseas mining.However, overseas resources mergers and acquisitions are different with general M&A.Resources is non-renewable, often involved in the issue of sovereignty. Many countries have put mineral resources into the national security strategy because of the shortage of resources. The environment of overseas M&A is complex; the procedure of overseas M&A is cumbersome; In addition, Mineral overseas investment requires huge amounts of money and a long period of time. All the factors above lead to great risks in overseas M&A.This article has six chapters; the main contents of each chapter are as follows:Chapter1:Introduction. This study describes the background and significance, this study briefly introduces the ideas and framework and purpose of this research and methods.Chapter2:Literature review. Briefly summarize the motivation of mergers literature, the process of mergers literature, the effect of mergers literature and the risk of mergers literature.Chapter3:theoretical analysis of the Chinese mining companies’ overseas mergers and acquisitions. This chapter first defines the meaning of the mineral resources and mining enterprises, and explains the concept of mergers and acquisitions; analyzes the motivation of Chinese mining enterprises’ M&A, and summarizes the pattern of Chinese enterprises’ overseas mergers and acquisitions. Finally, briefly describe the status of Chinese mining overseas mergers and acquisitions.Chapter4:risk analysis of Chinese mining companies’ oerseas M&A. This chapter first defines the M&A risk as the uncertainty of the M&A margin caused by the complex external environment as well as the enterprise’s own subjective factors. M&A risk is divided into non-financial risk, financial risk and risks specific to mining companies. Non-financial risk is the risk unrelated with corporate finance, including the host country political risk, the risk of legal policy, cultural integration risk, management risk, and risk of strategic decision-making. Financial risk refers to the possibility that the M&A activity is interrupted during the process because of the funds can not be supplied in time, including financial risk, payment risk, liquidity risk, interest rate and exchange rate risk, the target enterprise valuation risk. Risks specific to the mining companies include exploration risks, fluctuations in commodity prices and environmental protection risks. Finally, this chapter analyzes the risk sensitivity for different mining areas. The non-ferrous mineral enterprises are sensitive to environmental protection risks, environmental risks and the commodity price risks.Chapter5:Case Study of china Minmetals Corporation’s M&A of OZ Minerals. This chapter briefly introduces China Minmetals Corporation and OZ Minerals first. China Minmetals Corporation is a large resource group with state-owned background, while OZ Minerals is the world’s second largest zinc supplier and Australia’s third-largest mining company. Due to the impact of financial crisis, its market value plummeted. February16,2009, China Minmetals Corporation was officially submitted applications for acquisition of OZ Minerals to the FIRB.raised the total price of$1.7billion acquisition of100%of OZ Minerals shares. However, FIRB rejected the application for political reasons. China Minmetals Corporation quickly modified the merger agreement, successfully acquired OZ Minerals. This chapter analyzes the M&A process with the method of SWOT and analyzes the integration of M&A.Chapter6:Case summery of China Minmetals Corporation’s M&A of OZ Minerals. Analyzes the M&A risks of China Minmetals Corporation’s M&A of OZ Minerals with the theory of M&A risk in chapter4. Find out how they deal with M&A risks. In the end, this chapter put forward some suggestion, Hope can do some help for Chinese mining enterprises’overseas mergers and acquisitions.Throughout the text, the contribution of this paper is to:Summarizes the main risk in overseas mergers and acquisitions of mining companies. Based on the risk perspective, analyzed the case of China Minmetals Corporation and OZ Minerals. China Minmetals Corporation has a state-owned background, and Australia is the first choice for Chinese overseas resources M&A. This case is highly representative, and the result is successful. Through the acquisition of OZ Minerals by Minmetals case study, we research the risks faced in the merger, the measures taken in response. It has a certain reference value, providing a reference for Chinese mining companies’overseas M&A.Given the level of research and experience I gained limitations, there are still many to be further improved, I implore of teachers and students let me know. I will also do more detailed research in the future.