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Bid for bullion deposit

(China Daily/Agencies)
Updated: 2008-06-19 10:42

Zijin Mining Group Co, China National Gold Group Corp and two competitors are bidding to develop the country's largest bullion deposit as the price soars, the China Gold Association said.

Western Mining Co and Shandong Gold Mining Co are also in the race to develop the 308 metric ton deposit in the western province of Gansu, said Hou Huimin, vice-chairman of the association.

China's demand for gold jumped 23 percent in 2007, as rising incomes spurred jewelry buying, making the nation the second largest consumer. Bullion soared to a record in March, increasing competition for mines in China.

"China National Gold may be the top pick to develop the project because it's a big State-owned gold miner and enjoys a good relationship with local governments," Wang Feng, a Shanghai-based analyst at Everbright Securities Co, said. The companies may have to bid more than 6 billion yuan for the right to develop the deposit, he said.

Zijin, China's largest gold producer, gained 5.4 percent to close at 8.19 yuan in Shanghai trading. Shandong Gold, the third largest, rose 5.2 percent to 46.15 yuan. Western Mining rose 7.6 percent to 15.23 yuan ($2.21).

"The competition is so tense that no one is willing to give up and cooperate at this stage," Hou said. The provincial government of Gansu also wants a stake, he said.

The Yangshan deposit would be more than twice as big as Zijin's Zijinshan mine, currently the largest gold project in China, which has resources of 138 tons. The association didn't define the quality of the resource at Yangshan.