Five Miners Rushing for Yangshan Gold
By Interfax-China
19 Jun 2008 at 09:19 AM GMT-04:00
resourceinvestor.com
SHANGHAI (Interfax-China) -- China's top five gold mining companies are competing to develop a portion of the country's largest gold deposit in Yangshan, Gansu Province, an official with China Gold Group told Interfax yesterday.
"[The target] is a well prospected 140-tonne section of the Yangshan deposit. The mine's development has been opened for tender," the official, who wished to remain anonymous, said.
"After the first cull [of bidders] on June 2, only five domestic gold miners will continue bidding for the project, namely Lingbao Gold Co. Ltd. from Henan Province, China National Gold Group Corp. from Beijing, Shandong Province-based Zhaojin Group Co. Ltd. and Shandong Gold Mining Co. Ltd., and Zijin Mining Group Co. Ltd. from Fujian Province. They have all submitted detailed development plans," the official said.
The five bidders are unlikely to form a joint venture to develop the project, the official said, adding that it is expected that the National Development and Reform Commission (NDRC) will announce the second cull next month.
The companies may only bid for a 60% stake in the project, as a 40% stake will be held by the Gansu Province-based Jinchuan Group Ltd., according to an official with Zijin Mining's securities department, who wished not to be identified.
However, an official with Jinchuan Group's resource department, who wished to remain anonymous, said the group's role in the project is yet to be finalized. Gansu's provincial government must still decide whether Jinchuan Group will participate in the development of the mine, the official sad.
Lingbao Gold and Zhaojin Gold officials were unavailable for comment when contacted by Interfax.
The Yangshan gold deposit is located in Gansu's Wen County, and is one of the several gold deposits that form the "golden triangle" of Sichuan, Gansu and Shaanxi. Discovered in 2004, the deposit was assessed as holding proven gold reserves of 308 tonnes last year.
A string of other large gold deposits were also confirmed in China last year, with three major deposits reported in the provinces of Shaanxi, Heilongjiang and Jilin.
China's gold output is set to increase by between 10% and 15% annually over the next 10 years. A growth rate of 11% this year would result in a national production volume of 300.25 tonnes for the year.
Gold prices have surged in the past few years on the back of global inflation, growing demand for gold in China and India, and the need to hedge against high commodity prices.
December contracts for gold closed at RMB 196.86 ($28.60) per gram on the Shanghai Futures Exchange on Wednesday, up 0.08% from the previous day's trading, and Au (T+D) contracts on the Shanghai Gold Exchange closed at RMB 196.20 ($28.51) per gram, RMB 0.19 ($0.03) lower than the day before.
Commentary
There is no doubt that the competition between China's five top gold miners for the largest gold deposit in the country is ferocious. These companies are believed to meet requirements for financial competence, preparedness, detailed development plans, and advanced technology in mining and environmental protection.
Of the five candidates, China Gold Group, which is controlled by the central government, may have an upper hand with the NDRC. However, it will also require the consent of the Gansu provincial government, which is believed to be getting a share of the project by allocating a 40% stake to Jinchuan.
Although it has been said that overseas companies with the latest technology can bid for the exploration rights alongside domestic firms, the absence of a foreign company in the top five is telling. With a growing demand for gold, China has become increasingly keen to hold onto mineral resources that can be exploited by domestic firms, and the recent announcement of investment guidelines that make it more difficult for foreigners to tap into China's gold mines is evidence of this.
With domestic miners becoming ever more technologically savvy and experienced, the country will become less reliant on foreign companies.
© Interfax-China 2008. For further information regarding Interfax China Commodities Daily Reports, contact David Harman at david.harman@interfax-news.com. |
