2023 may mark a record year for China's metal sector investments overseas

According to some recent reports, the world's second-largest economy, China's investments in metals and mining in foreign countries, may attain an all-time high in 2023. The nation is making significant efforts to secure valuable resources to protect its status as the leading manufacturer of the latest trending sectors like electric vehicles (EV), batteries, solar panels, and wind turbines.

During H1 2023, the Chinese companies' investments and new contracts in the mining and metals sector surpassed around $10 billion, as revealed in a report by the Green Finance & Development Center at Fudan University in Shanghai. Fudan University is a leading independent think tank providing research, advisory services, and capacity building for financial institutions and regulators for green and sustainable finance in China and internationally.

The figure already exceeds the total investments made in 2022, indicating that this year's investments are on course to surpass the previous record of $17 billion set in 2018. However, this substantial growth highlights Chinese investors' significant interest and commitment to the mining and metals industry. The report reflects that Chinese companies heavily investing in various sectors, such as nickel, lithium, aluminium, copper, uranium, steel, and iron projects. This denotes their increasing commitment to securing access to resources along the clean technology supply chain, driven by the anticipation of robust long-term demand amid global efforts to combat climate change.

It is clear that China's investments across various countries in Africa, Asia, and South America bolster its resilience against the potential effects of escalating geopolitical tensions with the world's largest economy.

Dr Christoph Nedopil Wang, the Director of the Green Finance & Development Center at FISF Fudan University, said, “Overall, China’s BRI [Belt and Road Initiative] engagement seems to become more strategic, regarding both economic and industrial aspects: more bankable projects relevant for China’s and the host countries’ industrial development.”

Recently, the global reach of the Belt and Road Initiative (BRI) has been reduced. However, one notable area of success has been the resources sector. China has been strategically focused on obtaining essential raw materials, which has led to the growth of a vast domestic processing industry. As an outcome, China's dependence on foreign refiners for crucial metals like copper, aluminium, lithium, and cobalt has decreased significantly.

On August 1, 2023, the Fudan University data was made public, revealing that during H1 2023, investments constituted 61 per cent of Belt and Road Initiative (BRI) engagement. This marked a notable milestone as it was the first time in six months that construction contracts represented less than half of the total value of new BRI financing.

Dr Nedopil pointed out that a shift in risk assessment among Chinese investors and banks led to a reorientation of new financing for the Belt and Road Initiative (BRI). The emphasis now lies on revenue-generating and resource-backed agreements, favouring investments in metals, mining, and related sectors rather than traditional construction contracts and infrastructure projects.