China National Gold Group Corp., the nation’s biggest producer of the precious metal, said the government has tightened scrutiny on overseas deals.
The government asks for risk-assessment reports for overseas projects, President Sun Zhaoxue said today in an interview during the National People’s Congress in Beijing. The state-owned Asset Supervision and Administration Commission, or Sasac, which hadn’t previously studied those reports, is now asking to review them, he said.
“Chinese state-owned enterprises shouldn’t rush for overseas deals before we get well prepared for risk prevention,” said Sun. “We shouldn’t leave things to chance as we go overseas. We can’t afford the risks.”
Sun’s comments come two months after Barrick Gold Corp. (ABX), the world’s biggest producer, ended talks with Beijing-based China National Gold over the sale of its African unit. Chinese companies are facing obstacles in foreign transactions including cultural gaps and environmental barriers, Sun said.
“The Chinese government has attached greater importance to the possible risks that lie in overseas deals,” said Sun, also a former vice president of Aluminum Corp. of China., the nation’s biggest producer of the lightweight metal.
Gold for immediate delivery, down 5.9 percent this year as the recovery in the U.S. economy gathers momentum, traded at $1,577.22 an ounce at 3:58 p.m. in Singapore. The metal may trade between $1,550 and $1,750 an ounce this year, with prices mostly in the range from $1,600 to $1,650 an ounce, Sun said.
China should build gold reserves even as prices may drop, Sun said. This is because “over the long run, the dollar has big chances to drop,” he said.
The Bank of Korea joined Russia and Kazakhstan in boosting gold holdings even as prices fell. The BOK added 20 metric tons in February, raising its bullion reserves by 24 percent to 104.4 tons, it said today.
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