China’s largest gold miner accelerates expansion plans
China National Gold Group (China Gold), China’s largest gold miner, is accelerating its foreign expansion, through the planned entry into three large-scale gold mining projects in Russia and Kyrgyzstan.
In the case of Russia, an interest of China Gold is related with the local Chernogorskoye and Norilsk-1 fields, both of which are located in the Russian Taimyr and the Djerue field in Kirghizia.
Both projects are implemented by a Russian gold miner, Russian Platinum, owned by a local businessman Musa Bazhaev.
The reserves of Chernogorskoye, which is suitable for open mining, are estimated at 31.5 million ounces of platinum, palladium, rhodium and gold. In addition, it contains more than 800,000 tonnes of copper, nickel and cobalt.
At the same time, the reserves of Norilsk-1 are estimated at more than 90 million ounces of platinum and gold, as well as more than 3.3 million tons of copper, nickel and cobalt. Finally, the stocks of Djerue are varied in the range of 2.9-3 million ounces of gold (containing 5.8 grams per tonne).
A spokesman of Russian Platinum said that in recent years the expansion of Chinese mining companies in the global market of platinoids has significantly accelerated, with a particular interest in Russia and South Africa, which have the world’s biggest reserves of these metals.
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China currently remains the world’s largest importer of non-ferrous metals and platinoids. The country also ranks the world’s largest gold producer (14.56 million ounces in 2016, which accounts for 14% of global production) and consumer. At present the annual gold consumption in China is by two times higher its annual production, being estimated at 30.8 million ounces.
China is also the world’s leading country, in terms of nickel consumption (about 1 million tons, with the volume of imports – about 550,000 tons), as well as platinum (3.8 million ounces) and copper.
In the case of Chernogorskoye and Norilsk-1 fields, total volume of investments in the development of both fields are estimated at US$4 billion. Implementation of both project is expected to be started no earlier than at the beginning of 2019.
As for Djerue, the development of the field has already been approved by the Kyrgyz government.
It is planned that a mine and processing complex on the basis of the field will be launched in late 2018. Total volume of production is expected to be at the level of 150,000 ounces a year, while the volume of investments at the initial stage is expected to reach US$600 million. About US$200 million for the project are expected to be provided by the Eurasian Development Bank in the form of a loan.
China Gold has long been monitoring potential investment opportunities at the Russian market. In 2015 the company signed an agreement with the local Polyus Gold on the joint implementation of projects in the field of gold mining in Russia.
At that period of time the company was interested in the development of Natalka field in Kolyma, whose reserves are estimated at 16 million ounces, however no final agreements were signed.
In the meantime, China Gold is not currently the only investor in the Russian and CIS mining. Recently the Highland Fund completed the purchase of 13.3% in Bystrinsky mine and processing complex, which specializes on copper production from Norilsk Nickel for US$100 million.
At the same time, the Chinese Zijin Mining Group is currently involved in the development of Taldybulak Levoberezhny gold mine in Kyrgyzstan.
Eugene Gerden is an international free-lance writer, based in St. Petersburg, who specializes on writing in the field of mining, metals and rare earth metals. ... <Read more about Eugene Gerden>