The Yukon’s mining industry is increasingly looking towards China to raise money for exploration projects, said an official with the Economic Development Department.
Capital markets in the US have been severely weakened by that country’s major recession this year, said Denny Kobayashi, director of business and industry development.
And with China aggressively looking to invest in mineral holdings, North American mines are looking to that country for funds.
“It was hard to raise money in the capital markets, and so we need to diversify our sources,” said Kobayashi.
Economic Development Minister Jim Kenyon and his entourage were at a major Chinese mining exposition in Tianjin this week.
The nine-person junket, a joint trip between the Economic Development and Energy, Mines and Resources departments, is Kenyon’s sixth trip to China in five years.
The initiative costs around $40,000, said Kobayashi, but Kenyon’s presence is essential at wooing the Chinese government.
China’s major mining investment companies are state-owned and receive directions on where to invest from Beijing, said Kobayashi.
Because of that, the first gatekeepers in the Chinese investment market are always politicians, he said, and Kenyon’s role is typically to network between them and mining companies with properties in the Yukon.
“The minister is how we get through the door in a lot of cases,” said Kobayashi. “It’s not business-to-business, like in the US.”
Selwyn Resources, Western Copper, BC Gold, Overland Resources, Tintina Mines, Victoria Gold and Largo Resources Limited are all sending delegates to the China Mining Congress and Expo as well.
China has already made an $87-million investment in the Wolverine mine outside of Ross River.
And just last month, China Mining Resources Group Limited put down $7 million for shares in Selwyn Resources, which owns a major lead-zinc property at Howard’s Pass in southeast Yukon.
China Mining now has a 14 per cent stake in Selwyn.
“There’s some other small investments, and in some other cases they are buying shares,” said Kobayashi.
Chinese companies are negotiating investments in some Yukon gold properties, he said.
“They’re currently in negotiations with a number of mines here,” he said. “As you can appreciate, those negotiations are sensitive.”
China’s interest in precious metals like gold is one side of its massive foreign direct-investment empire, said Kobayashi.
“(The interest in gold) is simply an investment like the money market,” he said.
China is also interested in base metals to ensure it has the commodities it needs to keep growing.
That’s where copper mines in the Yukon come in.
“It’s a wise strategic move; ‘let’s be more vertical, let’s get into some production to support our economy,’” said Kobayashi.
China boosted copper prices this year after its economic stimulus plan revved up copper-intensive projects like electricity infrastructure.
The Yukon has been courting China since 2004 as part of its Asian Investment Strategy, which also targets Korea and Japan as potential investment markets.
The Yukon government’s role is increasingly shifting from economic development to providing geological expertise on projects in the territory, hence the presence of officials from Energy, Mines and Resources on the trip, said Kobayashi.
A 12-person delegation of private and state-owned mining companies from China visited Whitehorse and met with local mining companies in early August.
At the time, First Nation chiefs voiced frustration at being excluded from the Yukon government’s international mining outreach.
But the government is slowly bringing First Nations on board, said Kobayashi.
Stephen Buyck, a First Nation liaison, is travelling with Kenyon, he said. It’s the first time this has happened.
Buyck will try to figure out what kind of role First Nation chiefs could have the next time the Yukon goes shopping for investment.
Kenyon’s trip is part of a larger national focus on garnering Chinese money for mining projects. The federal Natural Resources Department is organizing a forum during the trip with various provincial officials.
Kenyon will also sign a province-territory sister agreement with Shaanxi province in Northeastern China, said Kobayashi.
The agreement will allow for future partnerships in the ore-rich province, he said.
Contact James Munson at
jamesm@yukon-news.com