Chinese real estate firms turn to mining « Mining Blog

Chinese real estate firms turn to mining

14. July 2011,

China appears to be facing a real estate slump. Nothing particularly surprising in that – but, according to a report from Mineweb (11 July 2011), as home sales fall, so property developers are getting into mining “in a big way, producing gold, lead, zinc and molybdenum”.

According to the China Mining Association, at least 15 property developers recently made mining investments totalling about $3 billion by the end ofJune.

The government’s property curbs have, reportedly, mostly affected small and medium-sized developers, but some large developers have also extended their presence to the mining sector. According to the financial statements by housing companies, more than half of the property developers enjoyed a profit margin of around 60% from their investments in mining, while a third posted a 20% return on mining related investment.

The Shenzhen-listed, Shandong Zhongrun Investment Holding Group, “swung back into the black last financial year after a two-year losing streak, only boosted by its investment in the mining industry”.

Another developer, – ann unnamed Jinan-based housing firm invested 500 million yuan last November in setting up a subordinate company to carry out mining development.
And housing developers like Zhuhai Port and Shanghai Wanye Enterprises also decided to invest in mines, with the latter investing in gold mines.

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