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.
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 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.