China May Exhaust Existing Gold Mines in Six Years (Update1)

By Feiwen Rong and Helen Yuan

Dec. 6 (Bloomberg) -- China, poised to overtake the U.S. as the second-biggest gold producer this year, must acquire more bullion assets overseas because existing mines will run out of ore in six years, Zijin Mining Group Co. said.

China produces more than 200 tons of the bullion a year from mines that only have gold, and will deplete the deposits without discoveries, Ren Guangzhi, manager of investment at Zijin, owner of the country's largest gold mine, said. Ren cited data from London-based research company GFMS Ltd.

Rising economic growth in China has led to surging demand for jewelry and spurred Zijin Mining, Zhongjin Gold Corp. and other Chinese producers to increase production. The Asian nation is the world's largest importer of iron ore and copper because domestic production lags behind demand.

``It's urgent for Chinese companies to develop gold mines overseas,'' Ren said in an interview in Shanghai today.

Zijin fell 0.9 percent to HK$11.40 at the 4:00 p.m. close in Hong Kong. The stock has more than doubled this year.

Zhaojin

Zhaojin Mining Industry Co., which holds the second-most untapped gold deposits in China, is looking to invest overseas, Lv Ruixiang, vice general manager at the Hong Kong-listed company, said in an interview in Shanghai today.

``We have examined some projects in countries such as the Philippines and Burma,'' Lv said. ``But there have been no agreements.''

Chinese miners may be able to profitably extract gold at lower grades compared with overseas rivals, Zijin's Ren said. Zijin could recover gold from ore with grade as low as 0.3 gram a ton, whereas other miners would need a grade of at least 3-5 grams, he said.

Zijin Mining agreed to buy a 20 percent stake in a Philippine gold project from Lepanto Consolidated Mining Co., Manila-based Lepanto said Nov. 8. The Chinese company also agreed in June to pay $55.1 million to buy a controlling stake in Tajikistan's biggest producer of the precious metal.

To contact the reporter for this story: Feiwen Rong in Shanghai at Frong2@bloomberg.net Helen Yuan in Shanghai at hyuan@bloomberg.net ;

Last Updated: December 6, 2007 03:28 EST

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Romania moves to block Canadian gold mine project

06 Dec 2007 08:14 ET

By Radu Marinas

BUCHAREST, Dec 6 (Reuters) - Romania looks set to ban the use of cyanide in mining in a move that will effectively block a Canadian project to build Europe's biggest open cast gold mine, officials said on Thursday.

Gabriel Resources has already invested more than $300 million in the Rosia Montana gold mine in the central province of Transylvania but the project has faced a series of hurdles over health and environmental worries.

A key environmental review required for the project was suspended by Romania's Environment Ministry in September following a court challenge from non-governmental organisations.

Gabriel has said the suspension is illegal and designed to appease voters, and has said it will use "all resources at its disposal" to reverse the decision. But it has said it will slash jobs and scale back activities related to the project.

A bill is now progressing through parliament that would effectively kill off the project by banning all cyanide mining.

Its sponsor, Senator Peter Eckstein-Kovacs, told Reuters on Thursday the bill had now secured government support and was very likely to be passed.

"There is a big chance that our proposed plan to ban cyanide in gold and silver mining will pass parliament. We have secured government backing ... and many opposition deputies back it."

"HAZARDOUS"

Eckstein-Kovacs, a member of the ruling coalition's junior partners, the ethnic Hungarians, argues the use of cyanide is hazardous and could lead to a repeat a 2000 disaster when a Romanian mine polluted cross-border rivers.

Romanian authorities and environmental groups say drilling in the Carpathian mountains would also destroy ancient Roman mines and that using cyanide would harm the environment.

Gabriel has defended the use of cyanide in mining saying that it cannot develop the Rosia Montana mine economically without using the poison.

Environment Minister Attila Korodi told Reuters on Thursday that he hoped parliament would give a verdict on the proposed change in mining legislation soon.

"The bill is now under debate in parliamentary commission. If it passes, Gabriel will need to bring a total change to their technical project," Korodi told Reuters.

Korodi said the review of the environmental impact assessment study could be unblocked if the court cleared the case:

"If the court rules that a previous certificate obtained by Gabriel is valid, we can go ahead with reviewing the project. Such an assessment can take several months."

But analysts said Gabriel had almost no chance of reviving its project given the current political situation in Romania, something that was unlikely to change at least until late 2008.

"The project has no chance," said political analyst Emil Hurezeanu.

(Editing by Chris Johnson) ((radu.marinas@reuters.com ; +40 21 315 8320; Reuters Messaging: radu.marinas.reuters.com@reuters.net ))

Keywords: GOLD ROMANIA/