China miners may need to polish global image

By Lucy Hornby

BEIJING (Reuters) - As China's mining companies increasingly cross international borders, concerns are growing over their conduct as good global citizens.

Such worries could lead to a set of government-imposed qualifications in a bid to avoid China getting a corporate black eye overseas as it struggles to keep pace with its super-sized economic growth, a senior official with the China Mining Association told Reuters.

Beijing has implored mining executives to "go out" and secure copper, zinc, iron ore and other industrial staples needed to power the growth. Many have answered the call -- investing in mining from Peru to Africa to Siberia.

Chinese groups are scouring the outback in search of Australian mining companies willing to swap equity for cash.

Australia last year picked Aluminum Corp. of China Ltd. (2600.HK: Quote, Profile, Research, Stock Buzz) from a field of 10 to develop the vast Aurukan bauxite deposits forfeited by rival Alcan Inc. AL.TO.

Analysts say parallels with China's push into Australia can be drawn from the 1980s when Japan, hungry for coal, funded exploration in exchange for part ownership.

Australia's Metals X Ltd. (MLX.AX: Quote, Profile, Research, Stock Buzz), which is developing a nickel mine, is selling a 13 percent stake to metals refiner Jinchuan Group Ltd. for A$32.8 million ($27 million).

But criticism of Chinese projects in Africa and Asia was spotlighting China's safety and environmental record, said Liu.

"To put it baldly, some of these mining companies have hurt the Chinese people's reputation," said Liu Yikang, deputy secretary-general China Mining Association, speaking during the Reuters Global Mining and Steel Summit.

Firms can be unprepared for the risks of investing abroad. Also, the higher cost of assets in developed countries sometimes -- but not always -- steers them to developing nations in Africa and Asia, Liu said.

Liu's organization was asked by government ministers to come up with guidelines for companies doing business overseas.

"The ministries' thinking is reasonable. Some very poorly-performing companies are going out, which was tarnishing the reputations of all Chinese companies abroad," Liu said.

He conceded, though, that the qualifications might be difficult to define and be of little help.

UNRULY HOME MARKETS

Beijing frequently responds to quality issues and unruly markets at home by restricting market access to more well-heeled firms. Entrepreneurs complain this favors inefficient state enterprises at the expense of market-driven private firms.  Continued...