A Comparative Policy Analysis for Cross-border M&A between China and Africa that Advances China's Leading Position in Mining

Abstract

China is still looking for resources and has recently engaged in aggressive cross-border M&A in the mining industry. Per China's 14th Five-Year Plan, the resource plan builds the foundation of China's rapid industrial development and growing economy. In recent years, it has been observed that acquisitions are focusing more on emerging markets' resources, such as Africa. Despite the negative effect of the pandemic, which cooled down cross-border mergers and acquisitions (CBMAs) in the mining industry, mining M&A's strategic importance to global industrial development makes it a major area of study. This phenomenon of mining M&A becoming China's story is closely related to economic policies and regulations in China and Africa. Hence, this article develops a comparative analysis of the different procedures in China and critical geographies in Africa that affects China's unceasingly expanding mining industry through acquisitions in Africa. Through comparative research analysis, we find that Chinas One Belt One Road Initiative (BRI) promotes CBMAs and investments in Africa and reduces operational barriers in policies and technology. The CBMAs success relies on a thorough understanding of local rules, major players, and legal policies in both nations. African countries have worked to improve their mining codes and raised their devotion to ESG to attract foreign investments. The inference is that Africa still possesses a great untapped potential for Chinese investors in the mining sector who understands the local market realities and can alleviate risks.