China
Plans to Help Bullion Producers Expand Overseas, Central Bank
Says By Bloomberg News
| Aug 3, 2010 6:44 AM EDT
China, the world’s largest gold producer,
will support overseas investment plans by “large-
scale” bullion companies by backing them financially,
the People’s Bank of China said.
Banks should extend credit lines to gold
producers and offer loans for overseas acquisitions, the
central bank said today in a statement on its website. The
government will “support” the companies when
they issue corporate bonds and help reduce financing costs,
it said, without clarifying what that meant.
This is the first time the Chinese government
has singled out bullion producers for financial support
in overseas purchases. Global gold mining takeovers this
year set a record after Kinross Gold Corp. yesterday agreed
to buy Red Back Mining Inc. for about $7.1 billion.
China “will place heavy emphasis on
supporting large-scale gold producers in their development
and overseas expansion plans,” the central bank said
in the statement.
The Chinese central and provincial governments
either fully or partially own stakes in China National Gold
Corp., Zhongjin Gold Co., Zijin Mining Group Co. and Zhaojin
Mining Industry Co. The Chinese gold industry overtook South
Africa to become the biggest producer in 2007.
Chinese bullion producers have completed
fewer than five overseas acquisitions of rivals in the past
10 years, according to data compiled by Bloomberg.
Zijin’s Deal
Zijin Mining pulled a planned A$545 million
($498 million) purchase of Australia’s Indophil Resources
NL this year after failing to win approval from the Chinese
government. The deal would have given the company a stake
in Philippines’ Tampakan project, Southeast Asia’s
largest untapped copper and gold deposit.
Bullion surged to a record $1,266.50 an
ounce in June and is set for a 10th straight annual advance,
the longest winning streak since at least 1920.
Chinese companies spent more than $30 billion
last year buying mining assets and oil deposits to help
secure raw material supplies to feed the nation’s
growing economy.