Palm | Kelapa Sawit

China, the world’s biggest user of natural resources, is pulling back from commodities and energy acquisitions as the rest of the world pursues deals at the fastest pace since the financial crisis.

China’s companies have spent $14.2 billion on acquisitions this year, down 30 percent from the same period last year, according to data compiled by Bloomberg. Worldwide the value of takeovers in the industry is $176 billion, the most at this time of the year since 2007. U.S. companies from Alpha Natural Resources Inc. (ANR) to DuPont Co. are the largest buyers.

After China snapped up assets from a stake in Repsol YPF SA (REP)’s Brazilian unit to Ugandan fields from Tullow Oil Plc (TLW), political unrest in countries such as Egypt and Libya helped push up commodity prices this year. The rebound led Glencore International AG to offer shares this month in the year’s biggest initial public offering, which may value the commodity trader at about $61 billion.

“Faced with strict regulatory control over Chinese acquisitions in the U.S. and other countries, Chinese companies have been shifting targets,” said Guan Anping, a professor at the People’s University of China in Beijing and a former Chinese trade official. “The turmoil in North Africa and Middle East highlighted the risks of resources investment in the region. Chief executives of state-owned enterprises became very cautious.”

Lubrizol, Danisco

U.S. buyers lead acquisitions this year, with the biggest deal coming from Warren Buffett’s Berkshire Hathaway Inc. (BRK/A)’s $9.2 billion takeover of lubricant maker Lubrizol Corp. (LZ) Mine owner Massey Energy Co. (MEE) agreed in January to an $8.3 billion buyout from Alpha Natural Resources Inc. DuPont last month raised its bid for Danish food-ingredients maker Danisco A/S to $6.4 billion.

Morgan Stanley (MS) has advised on 16 deals valued at $55 billion so far this year, the most among investment banks. Goldman Sachs Inc. comes second at $46 billion, and Credit Suisse has advised on $35 billion in transactions.

China lost the contest for Equinox Resources Ltd. last month, with Toronto-based Barrick Gold Corp. (ABX)’s C$7.3 billion ($7.6 billion) bid trumping Minmetals Resources Ltd. (1208)’s C$6.3 billion offer.

Most Expensive

The takeover was the most expensive copper mining acquisition, according to data compiled by Bloomberg. The battle came as China’s currency fell 2.8 percent against the Canadian dollar over the past six months. It reached a two-year low of 6.8681 yuan to the so-called loonie on April 29, and traded at 6.7889 as of 11:05 a.m. in Hong Kong today. Against the euro, the yuan has dropped 3.2 percent in the past six months.

“China is still pursuing acquisitions, but they are not the only game in town anymore,” said Richard Horrocks-Taylor, head of mining investment banking at RBC Capital Markets in London. “Chinese acquirers have become more sophisticated and more thorough in their assessment before they make an offer.”

In mining, China had already retreated last year, making acquisitions worth $4.5 billion compared with $10 billion in 2009, according to Ernst & Young LLP.

Valuations on mining and energy companies have gone up after crude oil jumped 43 percent in the past year to more than $110 a barrel in London and copper advanced 24 percent. The Standard & Poor’s GSCI Total Return Index of 24 commodities has beaten bonds, stocks and the dollar every month since December, the longest run in at least 14 years.

Baar, Switzerland-based Glencore’s IPO will set benchmarks for assets as it raises funds in London and Hong Kong, said Christine Tiscareno, an equity analyst at Standard & Poor’s.

Commodities Prices

“Prices are at the peak,” Tiscareno said. “China is very shrewd to take a back seat until they see what happens with Glencore. Even though they can afford to pay up and they need the resources, prices are likely to come down.”

Commodities tumbled last week on concern the global economy may slow. The S&P commodities index slid more than 10 percent, and crude oil declined more than 12 percent. Copper fell to the lowest price in almost five months last week on concern that higher interest rates will lead to slower growth and inflation.

China faces political opposition to some deals. Australia blocked a $2.8 billion bid by state-owned China Minmetals Corp. for OZ Minerals Ltd. (OZL) in March 2009 on national security concerns. Australia also helped stymie Aluminum Corp. of China’s planned $19.5 billion investment in Rio Tinto Group.

Political Barriers

“Political barriers raised by Western countries have frustrated Chinese in overseas takeovers,” said Heng Kun, an analyst with Essence Securities Co. in Beijing. “But that’s unlikely to deter their expansion plans in the long run. China will continue to seek iron ore, oil, copper, uranium and minor metals that are in domestic short supplies.”

China will build 10 cities larger than New York by 2025 and will need to import more steel, iron ore, coal, aluminum and copper, Rio Tinto’s Chief Economist Vivek Tulpule said last year. The nation will almost triple its annual use of copper to 20 million tons in 25 years, according to CRU, a London-based metals and mining consulting company, prompting companies to seek control of mines oversees.

“China has a longer-term strategic imperative to secure sources of future supply for commodities,” said Ric Ronge, who helps manage the equivalent of $1.3 billion at Pengana Global Resources Fund in Melbourne. “They will keep buying.”