Research On Zijin Mining Group’s Mining Investment Risk In Kyrgyzstan

Kyrgyzstan and other Central Asian countries, as the important nodes in the Silk Road Economic Belt, possess rich mineral and petroleum resources. With the promotion of the Belt and Road Initiative, this region would gradually become the new investment hot spot for the Chinese resource-oriented enterprises. Zijin Mining Group as the pioneer of Chinese overseas mining investment, has executed several mergers and acquisitions in overseas mining market. This article chooses the case of Zijin Mining Group’s investment in Kyrgyzstan to analyses the risks of the acquisition and propose the corresponding risk prevention measures.The study summaries the risk research at home and abroad, and selects the risk assessment theory and value at risk theory as the bases of this study to analyze the risks faced with Zijin Mining Group during the investment in Kyrgyzstan. At the beginning, the study investigates the current situation of Zijin mining group and its overseas investment, as well as the information of the Taldybulak Levoberezhny Gold Mine project. Also, it analyzes Kyrgyzstan’s the mining investment environment from five aspects, which are mineral resources exploration and development situation, relevant mining policies, political environment, economic development, social and cultural environment. Based on it, the study identifies the main risks internal and external of this investment. Comparing all the risk factors, the study concludes 7 first grade risk indices and 20 second grade indices and builds the risk assessment index system for mining investment in Kyrgyzstan. Next, the study uses the questionnaire survey and Fuzzy Comprehensive Evaluation method to measure each risk factor quantitatively and qualitatively. The results show the whole project has a relative high risk, and society and resource are two main risk factors. According to the results of risk evaluation, the study finds the fluctuation of the gold price in the market is the main influence factor of resource risk. To evaluate the price risk, the study uses the Value at Risk theory and estimates the risk via GARCH-Va R model considering the nonlinear and integration of data.In the end, taking the risk analysis results and the actual implementation situation of the project into account, the study proposes several corresponding risk prevention measures for Zijin Mining Group for its future mining investment.