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Home >> Business
UPDATED: 10:22, August 12, 2004
China's gold output expected to hit 210 tons
Gold output in the Chinese mainland is expected to reach 210 tons this year, according to an industry organization.
The figure will be up from 200.598 tons last year, said sources from the China Gold Association.
Output of the precious metal amounted to 93.351 tons in the mainland during the first half of this year, an increase of 5.231 tons or 5.94 per cent from a year earlier, showed statistics from the gold association.
Profits of gold producers in the mainland surged as a result of the output increase and bullish gold prices.
Producers reported 1.22 billion yuan (US$147.34 million) in profits in the first six months of this year, up 31.28 per cent from the same period last year, according to statistics.
Their output value totalled 14.22 billion yuan (US$1.72 billion) during the first half of this year, an increase of 20.83 per cent.
"We will be able to produce more gold to satisfy mounting domestic demand in coming years as the sector has opened to foreign investors, although the grade of our gold ores is declining and resources of some mines are drying up," said Wang Yanping, an official from the gold association.
Overseas investors, such as those from Australia and Canada, are investing in gold prospecting and exploration in China.
In the past, the gold sector was a forbidden territory for foreign and Chinese privately-owned investment.
"Gold prices in China will fluctuate at relatively high levels in the rest of the year affected by a slew of factors, such as the weak US dollar, lofty oil prices (and terror fear)," said Cui Lin, an analyst with Antaike Information Development Co Ltd, an Beijing-based metal consulting firm.
Cui predicted that world gold prices were expected to reach US$420 per ounce at the end of this year from around US$400 now.
Price at the Shanghai Gold Exchange, which fluctuates in line with changes in international gold prices, represents the benchmark in the mainland's gold market.
"Gold demand in China has huge growth potential with the opening of individual gold investment business," Cui said.
Some Chinese commercial banks and gold companies recently opened the gold investment business for individuals.
China Merchants Bank started to sell gold bullions to individuals as an agent of gold producers in June.
Zhongjin Gold Co Ltd, a Shanghai-listed gold producer, launched the individual gold investment business last month in Dalian in Northeast China's Liaoning Province in collaboration with a local partner.
China Banking Regulatory Commission is expected to approve the nation's "big four" State-owned commercial banks - Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank - to directly conduct the business this year, industry sources said.
Individuals in the mainland were prohibited to own gold bullions in the past.
Currently, jewellery accounts for more than 90 per cent of gold demand in the mainland.
Gold demand in the mainland grew by 6 per cent year-on-year to 61 tons during the first quarter of this year, according to statistics from the World Gold Council.
The demand included 59 tons of gold jewellery and 2 tons of retail investment, statistics indicated.
Last year, gold demand in the mainland stood at 207.5 tons.
The mainland imported 2.886 tons of gold jewellery in the first six months of this year, up 40.7 per cent from a year ago, to meet domestic demand, according to Cui.
Trading volume at the Shanghai Gold Exchange amounted to 14.44 tons, worth 1.55 billion yuan (US$1.87 billion) during the first half of this year.
The gold exchange, launched in late 2002, now has 108 members -including commercial banks and gold producers and processors - which conduct spot transactions using renminbi.
Source: China Daily
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