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Chinese mining acquisitions overseas have hit their highest level in more than a decade as companies race to secure the raw materials that underpin the global economy in the face of mounting geopolitical tension.

There were 10 deals worth more than $100mn last year, the highest since 2013 according to an analysis of S&P and Mergermarket data. Separate research by the Griffith Asia Institute found that last year was the most active for Chinese overseas mining investment and construction since at least 2013.

The country’s huge demand for raw materials — it is the world’s largest consumer of most minerals — means its mining companies have a long history of investing overseas. Analysts and investors say that the rise in dealmaking partly reflects China’s efforts to get ahead of the deteriorating geopolitical climate, which is making it increasingly unwelcome as an investor in key countries such as Canada and the US.

Michael Scherb, founder of private equity group Appian Capital Advisory, said there had been “more activity in the past 12 months because Chinese groups believe they have this near-term window . . . They’re trying to get a lot of M&A done before geopolitics get difficult.”

The trend has continued since the start of this year. China’s Zijin Mining recently said it planned to acquire a gold mine in Kazakhstan for $1.2bn. Appian sold its Mineração Vale Verde copper and gold mine in Brazil to China’s Baiyin Nonferrous Group for $420mn in April.

“In the next few years we are likely to continue to see a healthy level of dealmaking activity from Chinese mining companies,” said Richard Horrocks-Taylor, global head of metals and mining at Standard Chartered.

Christoph Nedopil, an expert in Chinese overseas investment and director of the Griffith Asia Institute, noted that under the Belt and Road Initiative, Xi Jinping’s hallmark foreign policy, transport and infrastructure projects have tended to be smaller.

By comparison, Chinese mining and resource investments overseas have remained large. This, Nedopil said, is in line with China’s pivot towards high-tech manufacturing, including in batteries and renewable energy. But it also reflects the fact that investors have become more sophisticated in their investment and operational approach.

China dominates the processing of most critical minerals — including rare earths, lithium and cobalt — but has to import a lot of the raw materials.

The US and many European countries are trying to reduce their dependence on China for these metals, which are key to the production of everything from electric vehicle batteries to semiconductors and wind turbines, and develop alternative supply chains.

Western countries including Canada and Australia were “increasingly wary” about Chinese investment in local mining assets given “the strategic nature of a lot of these minerals”, said Adam Webb, head of battery raw materials at Benchmark Mineral Intelligence.

Analysts and bankers noted that Chinese companies had become adept at snapping up mining assets from western rivals in recent years, often being willing to take a longer term view on valuations and invest in riskier jurisdictions. 

“There has been a [growing] sophistication of Chinese buyers’ outbound M&A strategies,” said Scherb.

“The Chinese government used to select one buyer per asset sale process and back that group. What’s evolved over the past three to four years is the government allowing Chinese groups to compete with one another. That implies they don’t fear losing to the west anymore,” he said.

John Meyer, an analyst at corporate advisory firm SP Angel, said that China had been making deals “to actively keep the west out of certain critical materials which they dominate”.

“Every time someone gets close to mining lithium, the Chinese come running with a cheque book.” 

The most active Chinese mining groups in overseas deals include CMOC, MMG and Zijin Mining.

Chinese financial institutions have also issued billions in loans for minerals mining and processing projects in the developing world. 

Timothy Foden, co-head of the international arbitration group at law firm Bois Schiller Flexner, who works in a number of African countries, said Chinese companies were positioning themselves to benefit from resource nationalism in nations such as Mali.

Some military governments in Africa have sought to take control of western mining assets and are demanding higher royalty payments. Chinese companies are often prepared to accept a less lucrative arrangement if they can take over the running of the asset, the lawyer said.

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US industrial companies are pivoting into the data centre market to boost growth, seeking a share of the hundreds of billions of dollars flooding into the sector as part of the artificial intelligence boom.

Gates Industrial and Generac are part of a coterie of publicly listed companies that are increasing efforts to build and sell specialist equipment, which includes backup power generators and cooling pumps, designed for so-called hyperscalers such as Amazon, Alphabet, Meta and Microsoft.

Honeywell, a $153bn North Carolina-based industrial giant that produces products from aeroplane engines to warehouse robots, is also trying to tap the fast-growing data centre market with its cooling solutions.

“We’re seeing supersonic growth on the back of AI and in general over the past three years the price that you can get from the data centre customer has been stronger than the price elsewhere,” said Chris Snyder, an analyst at Morgan Stanley.

It comes after other US-listed groups, such as Caterpillar, Cummins and Johnson Controls, have capitalised on the data centre boom at a time when economic uncertainty and trade barriers erected under US President Donald Trump have weighed on spending by customers in manufacturing and the commercial real estate market.

US factory activity has been declining over the past few months, with the ISM manufacturing purchasing managers’ index staying steadfastly in contraction territory since March.

Spending on data centres has proven resilient with analysts anticipating that more than $400bn will be spent on the build-out of the infrastructure in the current fiscal year, according to Gartner. Hyperscalers make up more than three-quarters of this expenditure with spending predicted to grow next year.

Vimal Kapur, Honeywell’s chief executive, told investors during a recent earnings call the company was “focused on pivoting” into higher-growth verticals such as data centres. “Those segments are growing regardless of the current conditions,” he said.

Honeywell has in the past 18 months started to focus on providing controls for hybrid cooling systems to data centres and has experienced double-digit growth in sales of their new hybrid controller for data centres and similar applications.

Morgan Stanley’s Snyder said that servicing was likely to provide a long tail of business for industrial companies but cautioned that smaller players who had yet to break into the market could miss the boat given investment would eventually taper from elevated levels.

Colorado-based Gates Industrial, a manufacturer of equipment for the heavy duty trucking industry, has in the past year started to push into the market designing pipes and pumps used to circulate coolant around server racks, a key component at a time when Nvidia’s most advanced Blackwell chips for AI model training and applications mandate liquid cooling.

“A lot of [equipment] is mildly customised,” said Mike Haen, vice-president of global product line management at Gates, noting its products were generally transferable to data centres.

Generac, the US’s largest producer of home generators, has targeted the hyperscale market in a bid to rebuild its share price, which has plummeted as much as 75 per cent since its peak in 2021, due to softening demand in its core business. Management has sought to diversify into an array of businesses including home power cells and electric vehicle charging.

Ricardo Navarro, Generac’s data centre chief, said the company had recently invested $130mn in facilities to scale generators for large scale projects servicing hyperscaler demand.

“The situation with data centres is unique. Even if the economy slows down on the traditional markets . . . [it] is almost isolated from economic downturns,” he added.

Data visualisation by Ray Douglas

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Sixteen years after Britain’s first high-speed rail service was launched, an official government review into the economic impact of HS1 on the south-east has concluded the £7.3bn scheme provided “poor value for money”.

The report, which was sat on by ministers for two years, comes at an awkward time for the government as it struggles to prevent further cost overruns and delays on the much larger HS2 scheme from London to Birmingham. 

HS1, which links London St Pancras International station with the Channel Tunnel and Kent, was opened in 2007 after receiving the go-ahead in 1991. It was sold at the time as a regeneration plan for the south-east, promising faster journey times and increased rail capacity.

“The starting point for a value for money assessment is that HS1 provides poor value for money,” said the government-commissioned report by Steer Consulting, an advisory group set up by Jim Steer.

Steer is an advocate for high-speed rail who helped spur the launch of the current HS2 railway project more than a decade ago.

The study said that international passenger numbers using HS1 were lower than forecast at the time the project was approved, and that it had failed to deliver the economic benefits to the region that were promised.

Although HS1 boosted population growth in Ashford and Canterbury, this was “largely associated with increased commuting to London”, said the report, which was released by the government in June.

The result was that “local economic indicators, such as GVA [gross value added] per capita, have not increased significantly compared with peer locations, which have not benefited from HS1”, it added.

The government is struggling with how to proceed with the new HS2 railway, which was originally intended to connect London with Europe and Scotland but has since been scaled back to run between the capital and Birmingham.

The cost has soared to at least £80bn, while there is still no plan for how to get trains into Euston station in central London despite demolition work starting on the site nearly a decade ago.

Transport secretary Heidi Alexander admitted last month that the project would be delayed by several more years. The government also revealed that HS2 may initially have to run at slower speeds than expected to prevent further delay to its opening.

Andrew Gilligan, a former Conservative transport adviser and head of transport at Policy Exchange think-tank, said: “This study, based on more than a decade of real-world evidence, disproves the overhyped claims about the economic benefits of high-speed rail.”

He added that HS1 was still “a much better project than HS2, costing two-thirds less per mile in real terms”. 

HS2 cost taxpayers £7.7bn in 2024, 57 per cent more than was spent on local public transport across the entire country last year, according to official figures. The line is now not expected to open until the mid- to late-2030s.

HS1 was sold in November 2010 to a consortium of private investors on a concession from the UK government to run the line for 30 years for £2.1bn. It is now owned by investors including HICL Infrastructure and Equitix.

Renamed London St Pancras Highspeed, it has recently offered financial incentives to operators to run services between London and mainland Europe. It aims to boost demand after its own study found that it could increase international passenger numbers from 1,800 an hour to nearly 5,000.

London St Pancras Highspeed said it had “announced an ambitious growth incentive scheme . . . which incentivises an increase in services, passengers and new destinations, and encourages greater use of existing stations domestically in the south-east”.

The Department for Transport said HS1 had successfully delivered on its objectives, more than doubling capacity for international rail services.

It added that the report had “methodological limitations”, such as not looking at regeneration impacts in London or wider, longer-term economic effects of the project.

As a former manager of Guns N’ Roses and Morrissey, Merck Mercuriadis knows a few things about making a comeback. Now, the veteran music executive is attempting to stage his own after a rollercoaster ride on the public markets left him out of a job and on the sidelines of an industry he helped transform.

Hipgnosis, which Mercuriadis launched in 2018 to buy song rights and was sold last year, is back with bigger ambitions. Mercuriadis plans a new investment group under the same name, bringing together artists and their managers as co-owners in a partnership structure to make music and to buy the rights to songs from others.

The 61-year-old Canadian-born executive can already claim to have transformed the modern music business, taking a once esoteric industry in owning composition rights and helping create a multibillion-dollar asset class on the radar of the world’s biggest investors.

He was at the vanguard of a wave of institutional money into the sector as Hipgnosis went on a $2bn spending spree, buying the catalogues of artists including Shakira and Mark Ronson.

Now, having kept his silence since leaving Hipgnosis when it was sold to Blackstone (and rebranded as Recognition Music), he says he has unfinished business. He acknowledges, given he found the investment community to be as cut-throat as the music business, that there were questions about why he would want to return to the industry. But he adds: “The work that we started is not complete yet, because the music industry is only beginning to be institutionalised.”

Meeting in his London home — with its vast collection of floor-to-ceiling vinyl — Mercuriadis is clad in trademark black Prada that he says he always wears to avoid having to spend time choosing something else. He would rather think, he says, about music, an art form that has been a life-long passion and that still seeps into his every conversation.

Mercuriadis says he came up with the idea for Hipgnosis in 2009 when he saw the growing popularity of Spotify. A US platinum record used to mean selling 1mn copies in a country that has almost 340mn people, he says, but “streaming [gave] the other 339mn a reason to pay for music”.

Mercuriadis often seems to know everyone in music, dropping anecdotes about helping one 1970s legend prepare for Glastonbury and others to reinvent their careers. He has a neat trick of asking people about their favourite artist only to respond that he has worked with them, counts them as friends, owned their songs or at least seen them before they were famous.

This is the reason many musicians trust him as a manager or owner of their music. One former colleague describes him as a music obsessive and “ultimate fanboy who just wants to be part of the world that his heroes inhabit”.

You pay the price you know is the right price . . . You’re only ever going to be able to buy the Red Hot Chili Peppers once

Investors, however, have had a trickier relationship with the LA-based executive, who was previously an artist manager and boss of Sanctuary, a UK-based music company that came close to collapse amid questions over its accounting.

Mercuriadis encouraged Wall Street, hungry for new sources of returns, to buy into his vision of a long-term asset class, alongside his own higher-minded ambitions to help songwriters whose work could, he says, “languish after they’ve had their hit parade time”.

He sold the concept of song rights bringing a steady income based on performance, streaming and use in TV, gaming and films and Hipgnosis and its rivals’ abilities to “work” assets by encouraging this use and giving a new lease of life to many tracks.

“The opportunity for institutional investors was massive, and massive enough to be able to both change valuations and give people a great return,” he says.

By the end of 2021, his public company was trading at its highest ever share price. But its fortunes turned when the sharp rise in interest rates after the start of the Ukraine war pushed up the discount rate used to calculate asset values and its dividend looked less attractive.

Cuts to the value of Hipgnosis’s portfolio and questions over its debt levels and corporate governance brought a strategic review by a new board, which led to last year’s sale of the company. Mercuriadis stepped down following the acquisition, with some rivals in the industry predicting that this time it would be tough for the music executive to bounce back.

Mercuriadis was accused of fuelling excessive pricing by rivals by flooding the market with money and overpaying for rights. He rejects this, saying Hipgnosis’s portfolio was valued in line with industry “average” multiples of close to 16 times, with returns guaranteed by a “101-year copyright-protected income stream”.

Former colleagues say he often seemed better suited to being a manager of music than money. But he does not seem bruised by the downfall of Hipgnosis and the criticism he faced, blaming activist investors for the sudden end of his former company. The $1.6bn sale to Blackstone — and subsequent returns for the US private equity fund — has shown the deals he led to be good, he says.

“I’m proud of the work, I’m very proud of the catalogue, I am proud of the return that we gave to the investors . . . You pay the price that you know is the right price because the asset is going to become more valuable. You’re only ever going to be able to buy the Red Hot Chili Peppers once.”

The wave of dealmaking started by Hipgnosis shows no sign of stopping: last year Sony alone struck deals worth more than $1bn for songs written and performed by Queen and Pink Floyd.

Mercuriadis’s new venture already has investor commitments in the “hundreds of millions” of dollars, according to people familiar with the matter. Talks are taking place for the first two acquisitions.

“I’m going to amass five or six really important management companies, all of which have superstar artists and superstar managers that go with them”, Mercuriadis says. “It’s all about them having control and all about them making the majority of the money [rather than labels].”

Blackstone are very smart people. They’re getting a great return on the catalogue that I put together

Increasingly, he says power lies with artists that have amassed large followings on social media before record labels approach them. Why should they hand over the financial benefit to labels?

Mercuriadis describes this as a “value shift” from music companies to artists and managers. The company will work with labels, streaming platforms and talent agencies as “service providers” but the “equity [and income] will be in favour of the artist”.

Mercuriadis will also buy music catalogues that will provide “very predictable, reliable, low-risk” income, and sit alongside the new music being created by its artists. His ultimate ambition would be to buy back the $2bn of music he amassed at Hipgnosis.

“One of my goals is to buy the catalogue back. Blackstone are very smart people. They’re getting a great return on the catalogue that I put together. So I’m going to have to pay properly for it. The one thing that everyone has said post the sale is, ‘OK, this now seems cheap.’”

Mercuriadis also wants to create a songwriters’ “guild” to help them negotiate with streaming platforms. “It all starts with the song . . . yet these people continue to be the lowest-paid people in the room,” he says.

“It’s these people who helped make me who I am . . . and I want to keep giving back.”