Zijin Plans More Gold Deals After $1 Billion Acquisitions Spree

Zijin Mining Group Co., the world’s biggest gold producer by market value, will press ahead with mine acquisitions to improve its portfolio quality, adding to the $1 billion of deals it agreed in the past year.

“We will not stop,” Executive Director and Vice President George Fang said Tuesday in an interview in Kalgoorlie, Western Australia. “In terms of how much we will need to spend, that depends on the opportunity and on the funding strategy.”

While China is the biggest producer of gold, it lacks large individual mines, which means producers including Zijin are searching overseas to add operations, according to Greg Foulis, chief executive officer of Kingsgate Consolidated Ltd., which operates mines in Thailand and Australia.

“China’s gold mines are very small on a world scale -- you don’t have the big production centers,” Foulis said in an interview in Kalgoorlie. “If Zijin wants to be a global gold miner, it needs to operate global gold mines.”

Gold producers proposed or completed deals valued at $9.6 billion in the six months to June 30, up 7 percent on the previous half, as asset prices declined in the wake of tumbling bullion prices. The metal fell to $1,077.40 on July 24, the lowest level in five years.

Zijin spent $710 million in May to buy stakes in mines in Papua New Guinea and the Democratic Republic of Congo. The producer said in June it intends to make a takeover offer for Australia’s Phoenix Gold Ltd.

Large Scale

“Zijin’s major strategies are globalization, large scale improvement of our asset portfolio, and to make it more efficient and more profitable,” Fang, responsible for Zijin’s cross-border M&A, said at the Diggers & Dealers mining forum.

Growth in demand for gold in China, also the biggest consumer, will continue to rise as the nation’s middle class swells by about 500 million people in the next five years, adding to jewelry purchases and investments, according to the World Gold Council.

Zijin is continuing to discuss potential opportunities from a strategic partnership with Barrick Gold Corp. announced in May, Fang told reporters. “We are in a process of discussing potential other opportunities with Barrick,” he said.

Fang declined to comment on whether Zijin had discussed a potential acquisition of Barrick’s 50 percent stake in Kalgoorlie’s Superpit, Australia’s largest open-pit mine.

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