Strong demand for gold products such as these jewelry is encouraging mining companies to expand their operations overseas. [Photo / China Daily]
TIANJIN - China's major gold mining companies are planning to ramp up efforts to expand overseas as gold demand rises in China and domestic reserves fall precipitously.China National Gold Group Corp, the nation's largest gold producer, said it will increase its annual capacity to 50 tons in five years, 30 to 40 percent of which will be produced overseas.
"We are looking for gold resources in Congo, Brazil, Russia, Venezuela and Mongolia, and most of them are in the early stages of geological exploration," said Du Haiqing, vice-president of the company.
The expansion by China National Gold as well as the Shandong Gold Corp Group comes as China - the biggest gold producer and second largest gold consumer in the world - faces a challenging situation in its supply of gold, according to the World Gold Council (WGC).
In the past five years, the WGC said the demand for gold has increased at an annual rate of 13 percent in China. A WGC report published in March said that if the demand for gold continues at its pace and becomes comparable with other major markets, China could exhaust its known gold mining reserves in six years.
China National Gold produces about 10 percent of China's gold but it has not as of yet had any overseas output. Du said the company is fairly cautious about overseas investments but is also being active.
Shandong Gold, a major player in China's mining industry, also plans to boost its overseas gold production.
"We hope that 30 percent of our annual output will be produced overseas by 2015," said Cui Lun, the company's vice-president.
The company has worked with companies in Mongolia, South Africa and South America to secure overseas mining resources. It plans to also work in Australia and Canada.
Another Shandong-based gold company, Zhaojin Mining Industry, sees the potential in overseas gold recourses.
"We are now focusing on the domestic market but we will go to other countries once we find good opportunities," said CEO Wang Peifu.
Wang said Zhaojin Mining Industry has followed a dozen of overseas projects since 2008. "We have negotiated with Papua New Guinea and the United States. But we don't want to rush," he said.
"It takes a long time for us to confirm the quality of the gold resources there and political issues matter a lot when it comes to overseas mergers and acquisition."
Statistics from the Shanghai Gold Exchange show that the price for gold jumped from 244.8 yuan ($35) per gram in early January to 288.1 yuan per gram in late November.
The recent $600 billion credit injection by the US government is likely to boost the demand for gold due to the expectations of higher gold prices.
"It is necessary for our company to go global due to the limited gold reserves in China," said Li Zhilin, general manager of the overseas development division with Zijin Mining Group.
The overseas push for gold follows a high level of activity worldwide from Chinese mining companies looking for metals such as iron ore.
Credit supply may top govt targets> 
