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China aims for a world gold medal

CHINA is aiming to have a gold output growth of 3 percent this year to secure its position as the world's biggest gold producer.

China will seek to boost its underground gold reserves by 800 metric tons and increase production from 282 tons a year ago to 290 tons this year, the Ministry of Industry and Information Technology said on its Website.

The government aims to encourage consolidation of the industry through mergers so the top 10 gold producers will account for more than half the nation's output, the ministry said, citing Deputy Minister Miao Yu.

Consolidation of the industry is one of the priorities this year, the ministry said.
The government will soon announce industry-wide guidelines to encourage mergers and acquisitions in the industry. Small gold mills will be shut down.

China's gold output grew an average 7.6 percent annually in the period 2003 to 2008 with average annual profits growing by 41 percent. Its gold reserves added an average 700 tons each year during the period.

The industry's profits topped 12.4 billion yuan (US$1.82 billion) last year at a record high while output grew 4.3 percent.

China surpassed South Africa as the world's biggest gold mining country in 2007 with a yearly production of 270.49 tons. Gold's generally bullish run has boosted the metal's allure and stimulated output.

Traditionally, China has not been a major gold mining country. The country's gold output was just 4.5 tons in 1949, rising to 100 tons in 1995 and then passing the 200-ton threshold in 2003.

Gold is gleaming against base metals and other commodities like oil. Gold traded at around US$957 an ounce today. The yellow metal touched a record high of US$1,200 an ounce in early 2008 and has managed to claw back ground since the fourth quarter of last year amid uncertainties in the global economy.

Turnover of gold in the Shanghai Gold Exchange, the country's sole gold bourse, skyrocketed 174.8 percent in 2008 to 868.39 billion yuan.


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