Detailed News

Northern Territory

Snapshot Of Chinese Investment In The NT - Business Briefing

08 March 2012

The business briefing was provided by Steve Tatzenko from the Department of Resources and Jane Wang, recently from Austrade in Xi’an.

Steve provided an outline of the long term mining development projects in the NT which involved Chinese investment. Many of these were joint ventures. He spoke about the campaign to attract Chinese investment. This included:

  • Recognise growing China interest in Australian mineral resources.
  • 2006 – Exploratory trip to China.
  • Develop proposed program to attract investment to NT.
  • 2007 – Cabinet approves Investment Attraction Program.
  • Establish dedicated Investment Attraction Team.
  • 2007-2012 – Successful implementation and growth of program.
  • Other states now trying to follow NT lead.

He noted that there has been a significant change in the trend of investment as Chinese companies have become more experienced and familiar with the Australian regulatory environment. Increasingly Chinese resource investment is now undertaken directly with the taking up of exploration licences and tenements without joint venture partnerships. Chinese investment fell into three phases. The first were JV’s and these were followed by equity positions in projects, and later by acquisition activity.

The current focus for new Chinese investment in the NT is in exploration rather than investment in proven or developed resources. This is a significant change in investment focus.

In addition to this overview of the investment landscape Steve also explored the reasons underpinning the success of this investment strategy. These lessons can be applied to any business seeking to engage Chinese investment partners. The key factors were building relationships and strategic partnerships. This included:

  • Dedicated Investment Attraction Team
  • Appropriate skills – Chinese language capability essential
  • Maintain open and regular channels of communication
  • Regular trips to China (Beijing and Provinces)
  • Facilitate Chinese delegations to NT (39 in 2011)
  • Deliver specific seminars to address Chinese needs

This presentation was followed by Jane Wang who examined the changing investment profile and interest of Chinese investors. This helped to highlight the potential opportunities in the NT. Chinese outbound investment has been growing significantly. It sill remains well behind investment levels from the US, the UK and Europe. However the focus of Chinese investment now includes several strands and both are actively pursued:

  • M&A: the fast track approach
  • FDI: longer-term political goals

A combination of Strategies & Goals:

  • Economic
  • Political
  • Industrial

Jane discussed the broader range of Chinese investment activity. Not all activities were relevant to the NT, but the discussion encouraged people to look beyond the resources industry. Jane provided an excellent summary of the new trend in Chinese investment. Investment areas included:

  • Continued government backing
  • SOEs - still main player
  • POEs - quickly catching up
  • SWFs - focusing on more direct asset investments
  • Chinese financial institutions (resource funds) - more active in deals
  • Still interested in energy and resources – more exploration deals, increased interest in uranium and rare earths etc.
  • Interested in investing in infrastructure
  • Very interested in clean energy - solar and wind
  • Also started to invest in soft commodities - agribusiness opportunities
  • Will invest more in R&D
  • Services, marketing, management, logistic.

The NT is well positioned to talk the language of co-operation with Chinese companies and investors, partly because we are a smaller jurisdiction and this lends itself to unique relationships. This is an area that the ACBC NT will explore further in 2012.

More than 25 people registered for this business briefing. This is the first in the regular series of business briefings conducted by the ACBC NT. They are designed as a springboard for members to explore issues in more detail with speakers.
The board room meeting facilities and light snacks were provided courtesy of ACBC member, NT Tourism.