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biz.scmp.com
Thursday, September 12, 2002
Zhongjin Gold eyes listing
ERIC NG
China National Gold Corp (CNGC) - the country's largest gold producer - has applied to the China Securities Regulatory Commission to list its subsidiary Zhongjin Gold Holdings on the domestic stock market, an official confirmed yesterday.
The planned listing forms part of a wider restructuring of China's gold industry aimed at increasing deregulation, boosting efficiency and attracting overseas investment and technology.
China is the world's fifth-largest gold producer with a volume of 181.83 million tonnes last year, which is expected to reach a record 190 million tonnes this year.
Zhongjin is majority-owned by state-owned CNGC, with other major shareholders including Shenzhen-listed Citic Guoan - a 50 per cent subsidiary of Hong Kong-listed conglomerate Citic Pacific, and Zhongyuan Gold Smeltering Factory, according to the CNGC official.
It was too early to say when the listing would take place or what the fund-raising target would be, the official said, but the main assets to be listed would include gold production and smelting operations.
His comments came two days after mainland media quoted Cheng Fuming, director-general of the Gold Bureau at the State Economic and Trade Commission, as saying CNGC had injected its quality assets into Zhongjin ahead of a spin-off.
CNGC had submitted a restructuring and merger proposal to the State Council for approval, Mr Cheng was quoted as saying at the sixth annual RNA China Gold and Precious Metals Convention in Shanghai.
Most of China's 1,200 gold mining firms were small and inefficient, with the top 24 producers mining 75 per cent of the country's output, he said.
CNGC accounts for about 20 per cent of the mainland's gold output. The country had some 500 gold mines in 1997.
The restructuring is partly aimed at separating government and business functions of the Gold Bureau, the industry's ultimate policy-maker, which currently shares staff and facilities with CNGC. The bureau is in charge of issuing gold mining licences.
Founded in 1979, Beijing-based CNGC had assets of US$360 million in 1995. In addition to gold mines, the company's assets include gold smelting facilities, equipment manufacturing and engineering firms, and a special gold materials and goods unit.
It has seven provincial branches, 18 wholly-owned gold mines and 10 joint-venture mines.
According to World Gold Council figures, Chinese consumers bought 213.2 million tonnes of gold last year, ranking it the world's fourth-largest gold market, after India, the United States and Saudi Arabia.
China's gold holdings stood at 500.8 tonnes last month - the 12th-largest in the world, but equivalent to only 2 per cent of the country's bank reserves.
The country has a "monopoly purchase and monopoly sale" policy on the gold industry, under which all gold producers must sell their gold to the central People's Bank of China, and all gold users must buy it from the bank.
But deregulation is on the way after China's World Trade Organisation entry and the establishment of the Shanghai Gold Exchange, which now facilitates gold trading among state entities. Private trading on the exchange has not been implemented.
China auctioned mining rights to a gold mine in Jiangxi province for the first time last month, which was opened to both domestic and Sino-foreign firms.
According to a JS Cresvale research report, China's domestic consumption of gold per head is only half that of India, one-fifteenth that of Taiwan and one-thirtieth that of Hong Kong.
The World Gold Council said global gold demand reached a peak of around 4,200 tonnes in 1997 before showing a declining trend.
Demand last year was around 3,700 tonnes. |
