Chinese, Indian firms step up in mining M&A

Chinese and Indian firms are increasingly snapping up mining assets as the credit crisis sidelines Western rivals, according to a leading sector investment banker.

The turmoil will spark consolidation in areas such as gold, emerging-market steelmakers, and junior miners, said Richard Horrocks-Taylor of RBC Capital Markets (RY.TO: Quote, Profile, Research, Stock Buzz), though the era of huge cash-funded mergers and acquisitions (M&A) is over.

Until about a year ago bidders from Asia's two emerging giants economies were often too slow, or too price-conscious, to win auctions, said Horrocks-Taylor, a managing director for global metals and mining at the Canadian bank.

But now, they were increasingly sophisticated players in M&A, focused on garnering control of supplies in key areas like iron ore, he told the Reuters Global Mining Summit in London.

"Groups that would've been in second-place or not getting into the second round of M&A processes are the ones now succeeding," Horrocks-Taylor said on Monday.

"When we come down to a shortlist we'd expect probably half the list now to be based out of India and China for certain assets," he said.

He cited Chinalco's $19.5 billion deal to buy convertible bonds from Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz) (RIO.AX: Quote, Profile, Research, Stock Buzz) and take stakes in key mines as "a great example of the Chinese locking into assets which are world-class."

"While we have a severe situation at the moment, (China and India) don't want to go back to the position they've been in the last few years: beholden to a handful of Western-owned, managed groups that have got very large market positions in the key commodities," he said.

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