LIMA, PERU — Gerry Wolfe, the Canadian-born president of a Chinese mining company, has a pretty good explanation for why Beijing isn't hunkering down like everyone else during the global financial crisis: "The Chinese have more cash than anyone else right now."
That's one reason Chinalco Mining Peru, a unit of China's state-owned Chinalco, is continuing with a project announced two years ago to open a $2-billion copper mine in the Peruvian Andes by 2012, Wolfe said in an interview in this capital Friday.
"They went through the last 10 years selling things and piling up billions of dollars in surplus reserves, which they are now using to finance an expansion into the world," said the soft-spoken Wolfe, who, in a short-sleeved shirt and khaki trousers, hardly fits the image of hard-charging chief executive.
The open-pit mine is expected to produce a quarter of a million tons of copper a year and is one of five major Chinese mining projects planned for Peru that appear to be advancing despite the darkening economic climate. The reason? The Asian giant's insatiable need for raw materials.
Erica S. Downs, a China expert at the Brookings Institution in Washington, said Chinese mining companies are aggressively expanding worldwide, often through mergers and acquisitions that target companies that have been laid low by the crisis. An example is Chinalco's bid to acquire control of Rio Tinto, a giant Australian-British mining company.
"When the economy was booming, there were fewer attractive assets for sale, and often stiff competition for those that were available," Downs said. "Today, Chinese firms are finding the opportunities for international mergers and acquisitions to be much more plentiful."
Whether through mergers or original projects such as the copper mine in Peru, China's moves in mining reflect the country's strategic decision to exert "more direct control over resources," Wolfe said.
"They had the option of continuing to buy in the global marketplace but seem to have made a change of plan," he said.
Rich in natural resources, Latin America has been a special focus of Chinese investment in recent years. China's leadership announced in 2004 that it would invest $100 billion in this hemisphere over the ensuing decade, and after a slow start it seems well on its way of meeting the goal.
