Source: CCTV.com

11-08-2008 14:45

The part 5 of 360 series on the gold market in China will tell you about a bidding war for the largest gold mine in the country.

Gold bears instrinsic value.

Gold bears instrinsic value. But it can also be reworked into the most intricate items of adornment.

On July 26th 2008, a year of intense bidding war in China's gold mining industry finally drew to a close.

The target was none other than the Yangshan Gold Mine in Northwest China's Gansu province. The mine has a proven gold reserve of at least 308 tons, making it the largest in China to date, and the sixth largest in the world.

Rights to explore such a lucrative field had attracted fierce competition from both domestic and foreign miners. But it was the country's largest gold producer, China National Gold Corporation, that finally came out on top. It came at a heavy price tag of 318 million US dollars. But that didn't dampen their excitement.

Sun Zhaoxue, president of China National Gold Group Co, said, "After we get the mine, the increase of our gold reserve is very significant, it has great potential. And for us, it means we are now first place in China's gold mining industry. We've become the real No.1."

Number one, a coveted spot for a company which has only existed for 6 years.

Prior to 2002, China National Gold Corporation was just a department within the government.

Because of the sensitivity of gold as a strategic resource, the precious metal was strictly regulated. The industry was scattered, containing just small miners lacking in efficiency, professional technology and skills.

All that began to change when China opened up the gold market in 2002. The government established the China National Gold Corporation as a state-owned enterprise under the central government. Since then, it has developed at lightning pace-, at 80 to 100 percent annually - like a sudden release of a long, restricted power.

Other several big gold companies have also emerged over the past few years, greatly increasing market consolidation. Through mergers and acquisitions, these companies are gaining strength, while simultaneously boosting the standard of whole industry.

In 2007, China took over South Africa to become the world's largest gold producer. And many market analysts say, the country will assume a bigger role in the world's gold market, in going forward.

Philip Klapwijk, Executive Chairman of GFMS LTD., said, "It is not fully integrated into the world market, but it does have impact on the world's market, because of the consumption of jewelry and production of mine gold, which was highly important."

Besides market consolidation, another variable is also fueling the rapid growth of China's gold industry: advancements in technology. Difficulties in gold exploration has long been a major hurdle for the sector.

Zhao Bin, Executive President of Rich Gold Investment Co., Ltd, said, "Although China has a large gold reserve, gold mines are relatively more difficult to deal with. First, the proportion of associated gold is large. Second, there are many gold ore areas that are difficult to mine. Third, most of them are small gold mines. There are only a handful of big or super-large mines. Fourth, the exploration is complicated, only a few of them can be explored in the open air."

To boost the development of gold production, the Chinese government is encouraging and supporting technology innovation in the gold mining industry.

Sun Zhaoxue said, "The Chinese government has given high priority to establishing an innovative country. Problems which are key to an industry's development such as the gold industry are studied as important issues for the Ministry of Science and Technology, and the National Development Reform Commission. As a result, we have received the attention and support from related government departments, including funding to do research."

The China National Gold Group has 3 national-level research centers and a postdoctoral work station. It has completed 1,550 research projects, holds 63 patents, and won 3 national science and technology progress awards. Today, China boasts almost all of the latest technologies available to mine gold ore. And the hard work from the steep learning curve is beginning to pay off.

Zhao Bin said, "China's gold production can now basically meet domestic need. The technology is advancing continuously. Some gold mines which we were unable excavate in the past, can now be tapped and explored. "

Experts say the advancement in environmental protection is also impressive. After years of development and learning, it appears that Chinese firms are now ready to not only be successful, but environmentally responsible producers of gold.

Sun Zhaoxue said, "Environment protection and pollution reduction are key issues for us. We are now adopting the first-grade technology to strengthen the environment protection efforts. This is very important for improving local people's wellbeing and achieving harmonious development."

Andre Gauthier, president and CEO of Maxy Gold, a Canadian gold mining company investing in China, commented on the tremendous changes that have been taking place here.

The change and progress of China's gold mining industry over the past few years has been remarkable. Just six years ago, the industry was scattered, small-scaled and outdated. Today, this very same industry is attracting attention and gaining respect from around the world. However, it's not just about being the world's largest producer of gold. It's about being the best in every aspect. From size and profitability, to technology, to social responsibility. It's a long way to go. But at least, the journey, has begun.

 

Editor:Zhang Ning