According to Paul Atherley, managing director of gold mining company Leyshon Resources, Heilongjiang province in northeastern China has so far produced 20 million ounces of gold - and most of that has been picked up off the ground.

Atherley was speaking at the Mining & Metals 2008 conference in Hong Kong yesterday, an event which also featured a couple of the other foreign-invested stars of China’s burgeoning gold industry, Jinshan and Sino Gold. Lest we forget, China became the world’s largest gold producing country in 2007, ending South Africa’s 102-year reign at the summit.

Heilongjiang is sitting on a rich seam of gold (Yunnan is the other key gold-producing area) but the absence of proper drilling expertise means it has gone largely untouched, apart from the easy pickings sitting on or close to the surface. As a result, foreign operators are queuing up to get involved. Leyshon, Jinshan and Sino Gold have all been to the capital markets (AIM, Toronto and Australia/Hong Kong respectively) to raise funds and are now getting busy at the rock face with their joint venture partners.

China resources + foreign expertise = gangster bling.

Related

Reuters: June 10, Jinshan mulls HK IPO

Mining Weekly: China surpasses South Africa in gold output

Economist: Gold backgrounder

Highlights from the last week of China business news.

Inflated figures
China’s third-quarter macro figures came out last week. The trade surplus in October continued to surge, which for once is actually surprising. Expensive commodities worldwide meant that the value of imports was up 25.5% from a year ago, but export growth still outpaced it, leaving the month’s trade surplus at US$27.05, a record high. The central bank said GDP rose 11.5% in the first three quarters, compared to a total increase last year of 11.1%. On the other hand, inflation rose 4.1% in the first three quarters, compared to a 1.5% rise in 2006. Goldman Sachs analyst Hong Liang raised a warning about inflation again (she did this a few months ago at the height of the pork shortage too), saying that the monthly CPI could hit 7% this year. The central bank has done the only thing it can do: raise interest rates. The reserve requirement rate will go up for a ninth time this year, to 13.5%, effective November 26. Central bank governor Zhou Xiaochuan has pledged to fight inflation, but how exactly he plans to do this is anyone’s guess. Goldman predicts two more rate hikes by year’s end.

Planning a buying spree
Remember all that talk about a gush of Chinese capital outflows? Well, it’s definitely in the works. China National Offshore Oil Corp, which reduces to the rather cute acronym CNOOC, was linked to acquisitions in Australia and Nigeria this week. There was a rumor that CNOOC wanted to take over Shell’s stake in an oil project in Australia’s Northwest Shelf region for US$450 million, which was later curtly denied by the Chinese company. Now, a new story has surfaced, saying CNOOC wants to hand over US$900 million to Shell, again, but this time for almost 50% in two Nigerian offshore blocks. No comment from CNOOC.

But commodities acquisitions aren’t really news - banking buy-ins, however, are. The FT broke the news - citing anonymous sources - that China’s top three banks, Bank of China, ICBC and China Construction Bank, approached Singapore’s Temasek Holdings to buy its 17% stake in Standard Chartered. The contacts were “informal and discreet,” which could mean anything, really. In any case, no deal is on the cards - Temasek isn’t selling, and Standard Chartered isn’t keen on having its independence questioned by having the Chinese as its largest stakeholder. An ICBC official denied that any such offer to Temasek took place. Lastly, the much-ballyhooed China Investment Corp revealed that it’s a cornerstone investor in China Railway Group’s Hong Kong listing. The sovereign fund will take US$100 million, the biggest institutional stake, in the H-share offering. This is its second move after buying into Blackstone months ago.

Singapore boosts its guanxi
China and Singapore indulged in a week of cozy relationship-building, with top officials of both countries meeting here and in the land of the Merlion. Singapore’s Lee Kuan Yew told Singapore’s newspaper, the Straits Times, that the man tipped to be Hu Jintao’s successor, Xi Jinping, belonged to the “Nelson Mandela class of persons,” upon meeting him for the first time in China. Meanwhile, Premier Wen Jiabao spoke candidly at a conference in Singapore, saying that illegal money flows threatened China’s stability and that his government would have difficulty reaching the environmental targets they set for themselves. This culminated in the announcement that China and Singapore would build an “eco-city” together in Tianjin, that hot economic development zone the central government is now so keen to promote. It brings to mind another Singapore-China project, the Suzhou Industrial Park, which was started when China was still trying to encourage industry in the Yangtze River Delta. More eco-cities are a good idea, because hopefully it will mean hearing less disturbing news, like the report this week about China’s increasing appetite for nuclear energy, and how it has just signed a landmark deal with Kazakhstan to buy the uranium it needs to build 40 new nuclear power plants by 2020.

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We overlooked the Christian Science Monitor’s excellent series of articles from a couple weeks ago titled “Is China Good for Africa?”, which you can read here. More than the typical hand-wringing stories about how China’s all-time high in trade with Africa (US$55 billion last year and counting) is propping up corrupt and evil regimes and unfair to locals (though there’s a fair share of that as well), the series also looks at the more mutually beneficial outcomes and China’s experimentation with internationalism and soft power through things like its own version of the Peace Corps. Definitely worth a read if you missed it the first time. A few excerpts: (more…)