Gold output hits record high
chinadaily.net
(GONG ZHENGZHENG)
01/25/2002
China's gold mining sector made record achievements last year, although the metal's price was on a downward trend, according to an industry official.
Cheng Fumin, director of the Gold Administration under the State Economic and Trade Commission, yesterday said domestic gold output reached a record high of 181.83 tons in 2001, an increase of 3.9 per cent from that of the previous year.
The sector's profits increased by 3.5 per cent to 1.2 billion yuan (US$144.5 million) last year from those for 2000, Cheng said.
"The achievement was hard won because the price of gold was at a low ebb last year," he said. The average gold purchasing price in China was 70.84 yuan (US$8.53) a gram last year, down from 74.65 yuan (US$8.99) a gram in 2000, he said. He said the scenario resulted from a bearish world gold market last year, despite the sudden jump in the world gold price after the September 11 terror attacks in the United States.
The People's Bank of China, the nation's central bank, has been bringing the domestic gold price more in line with the world level. In June last year, the bank began to implement a weekly quotation system for domestic gold prices, keyed to fluctuations in the world market in last June.
"However, the sector still faces great challenges because of the ongoing deregulation of the domestic gold market and China's entry into the World Trade Organization (WTO)," Cheng told China Daily. He called on domestic gold mining firms to speed up efforts to study market conditions and build up sales channels for their products this year in preparation for the adoption of market-orientated operations.
As the first step towards market deregulation, a national gold exchange was set up at the end of last year in Shanghai, China's financial centre. Twenty four gold mining firms, including China National Gold Corporation - the largest in the nation - have been allowed to do spot transactions in the exchange. The exchange will kick off official operation sometime in the first half of this year. The central bank will gradually reduce gold purchase from these mining firms, which account for three-quarters of the total gold production in China.
Previously, domestic mining firms had to sell all of their gold to the bank, as the central government had tightly controlled the market since the founding of the People's Republic. Roland Wang, a Beijing-based manager of the World Gold Council, said earlier that domestic gold mining firms would face greater challenges as their foreign rivals would ultimately be allowed to enter into the exchange as a further step in the reform of the gold market following entry into the WTO Cheng said the fragmented sector would speed up its restructuring to establish big groups to deal with weak price pressures and enhance its competitiveness under the WTO.
The commission has plans to form 12 internationally competitive groups by 2005 by on consolidations and mergers among domestic gold mining firms. The government hopes that these groups will produce two-fifths of the national gold output and half of the sector's total profits by 2005.
"Most of the more than 1,200 gold mining firms in China are small-sized and will not be able to survive the fierce competition after the market deregulation and WTO entry," he said. Wang Dexue, an official from the commission, yesterday said he had learned that foreign gold producers, such as those from South Africa, want to expand exports to China after WTO entry, which is expected to increase the pressure on domestic mines.
The commission has announced the sector aims to produce 220 tons of gold a year by 2005. Cheng said the sector had set a production target of 180 tons for this year. |
