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The Ministry of Industry and Information Technology issued guidance: The industry will implement access management
Recently, the Ministry of Industry and Information Technology released guidelines aimed at promoting the sustainable and healthy development of China's gold industry (referred to hereafter as the "Opinions"). These Opinions highlight a significant disparity between China’s gold production and consumption. In terms of consumption, China is projected to surpass 1,000 tons of gold usage in 2015. However, due to an unreasonable industrial structure and sluggish growth, domestic production remains constrained. In 2011, China’s top ten gold companies collectively produced just 184 tons, a stark contrast to Canada’s Barrick Gold Corporation, which produced 240 tons annually.
In response, the Opinions emphasize the importance of enhancing industry access standards and encouraging mergers and acquisitions as key strategies moving forward. Industry experts anticipate these measures will create favorable conditions for leading firms.
One major obstacle to industry growth lies in the low concentration levels within the sector. Since the global financial crisis began in 2008, nations worldwide have recognized gold’s irreplaceable role as a hedge against credit currencies. Central banks across the globe transitioned from net sellers of gold to net buyers in 2010, underscoring gold’s financial significance and reinforcing its strategic importance.
Moreover, gold’s dual roles as a store of value and a safe-haven asset, along with robust consumer demand, suggest that China’s gold consumption could exceed 1,000 tons by 2015. This figure far exceeds current domestic production levels, creating a substantial gap.
According to the Ministry of Industry and Information Technology, the current industrial structure has hindered domestic gold production growth. Of China’s over 700 gold mines, approximately 70% of companies produce less than 10,000 ounces annually, accounting for only 15% of total output. This fragmentation results in inefficient resource utilization, with China consuming an average of 1.7 tons of reserves per ton of gold mined—1.5 tons for larger operations and over 2 tons for smaller ones.
To address these issues, the Ministry has prioritized corporate mergers and restructurings as a primary focus for gold industry management. It encourages large-scale enterprises to consolidate through cross-regional and cross-ownership mergers, using capital as a catalyst. Priority will be given to granting mining rights to larger enterprises, while supporting multiple companies in consolidating existing mines. This approach aims to reduce the number of mining and smelting entities and boost industry concentration.
Additionally, the Opinions stress increasing the scale of operations to improve resource utilization. For instance, new open-pit mines must reach a daily capacity of 200 tons, while underground mines must meet 100 tons/day. Similarly, independent concentrators without associated mining systems must achieve 200 tons/day for new operations. Independent cyanide facilities with less than 50% self-supplied raw materials must operate at least 200 tons/day for new setups, while independent heap leaching operations require capacities of 1500 tons/day for new ventures.
Insiders believe these policies will push outdated capacities out of the market. As inefficient operations phase out and mergers progress, leading enterprises will seize greater developmental opportunities.
This reform marks a critical step toward modernizing China’s gold sector, ensuring both economic efficiency and long-term sustainability.