Chinese gold miners asked to boost output

China has told gold producers to increase output and meet state quotas to ensure an annual growth rate of 10%, Agence France Presse reports from Beijing.

The nation’s gold reserves have been affected by the sale of less of the metal to the state between January and May than in the same period of last year, despite a rise in gold output, the China Daily said.

Gold producers are obliged to sell to the state at a fixed rate lower than the market price.

The paper said the low state prices were creating difficulties for some firms faced with rising raw materials costs, quoting reliable sources as saying they had sold part of the production elsewhere at market prices to make ends meet.

The ministry of metallurgical industry has called on gold production administrative departments to take measures to

ensure production rises substantially this year.

Actual gold production is a state secret, but Xu Daquan, vice-minister of the metal ministry, has called for an annual increase of 10% to be maintained until the end of the century.

Meanwhile, the China Daily reports that Chinese gold-mining companies are seeking projects overseas and one company has already signed a deal for production in Madagascar.

The Heilongjiang Gold Company, a subsidiary of the China National Gold Corp. (CNGC), decided to seek opportunities abroad because of the declining viability of deposits in northeastern China. The company signed a joint-venture agreement with a firm in Madagascar to extract gold and precious stones in the Indian Ocean country.

Mining and extraction equipment has been shipped to the nearby port of Dalian ahead of shipment to Madagascar, the newspaper said, adding that the CNGC has also made contacts with Indonesian partners for the joint development of gold deposits in that country.

China’s gold production is a state secret, with the only available statistics referring to the rate of growth in gold mining, which has fallen this year in China for the first time in 10 years.

Yet the demand for gold jewelry is growing rapidly, spurred by rapid domestic economic growth and by Chinese who see the precious metal as a hedge against inflation and fluctuations in the value of the country’s currency. Gold reserves in China’s central bank total some 400 tonnes.