Falling commodities markets and a slowing Chinese economy are not the only factors weighing on the mining and energy sector. Joanna Law looks at the legal and economic developments
As China’s massive economy slows and commodity prices continue to fall, China-related mining and energy markets face challenges to attain and hold onto investment. The global slide in oil prices has had a major impact as producers like state-owned CNOOC slash capital spending. China’s pollution problems and moves towards cleaner energy sources are only just beginning to be felt, but it’s a sign of the times that more traditional energy sources will now need to factor this in to their future plans.
And as Chinese investors search for new and more profitable sources for mineral and energy resources, some traditional staple markets may be feeling the heat as projects go offline or stall in favour of newer, financially attractive markets. Fuelling this trend: while some countries are pushing out new measures to attract more Chinese investments, others are issuing rules that eliminate some regulatory benefits that had been enjoyed by Chinese companies.
On the Chinese side, companies’ lack of sufficient legal understanding in other jurisdictions is still creating problems. In April 2014, Iran cancelled a US$2.5 billion deal with China National Petroleum Corp, alleging China overcharged for equipment. And inbound investment in China’s energy and resources sector has been sluggish at best.