China's leading gold miner's ambition
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"Our development strategy is to stay focused on gold and we aspire to become world's top 10 gold miners within five or six years," Lu Dongshang, who currently leads one of China's top four gold miners Zhaojin, told Xinhua in a recent interview.
As its domestic competitors rush to buy mines of copper and other non-ferrous metals in a bid to diversify their portfolios, the Shandong-based Zhaojin remains cool and only merges smaller gold producers mainly in the country's west.
"Years ago, heated debate erupted in the company about whether we should extend our scope of business to other metals or deal exclusively with gold which we have been doing for decades," the 48-year-old mining-technician-turned executive said.
"Finally we agreed it's best for the company to focus on what it's good at. After all, there is still big growth potential within the gold mining and processing industry," Lu told Xinhua on Monday in an exclusive interview, shortly after he appeared at a HK press conference to answer questions about its newly-released interim report.
Zhaojin was listed on the HK Stock Exchange at the end of 2006, the last of the top four Chinese gold miners to become public after Zijin, ZhongJin Gold and Shandong Gold.
Zhaojin, which now owns 25 mines in China, with seven of them in Shandong's Zhaoyuan City, dubbed China's "land of gold", the company surprises many with a stunning over 80 percent year-on- year growth of net profit in the six months ending on June 30, 2010.
According to its interim report, Zhaojin earned a net profit of 572 million RMB (about 84.14 million U.S. dollars) during the first half of 2010, representing a 81.03 percent rise over the same period last year.
Lu attributed the robust profit growth to three reasons. Aside from the higher gold production by the company and the surge in gold price, the company also benefited from a tailor-made system which enables the company to sell more gold at higher prices and less at lower prices.
"We sold gold at an average price of 263.89 Yuan RMB for each gram during the period while the average price in Shanghai Gold Exchange was 253.8 Yuan for each gram," Lu said with pride.
In order to make itself more competitive, Zhaojin has merged several gold mine companies in Gansu and Liaoning provinces and Xinjiang and Guangxi autonomous regions during the half-year period.
The moves, which cost Zhaojin over 500 million Yuan RMB, further strengthens Zhaojin's position in key gold mining regions in China, Lu said.
The leading Chinese miner also bought 2 percent stake in Citigold Corp in Australia for 2 million Australian dollars (about 1.79 million US dollars) in July, the first overseas investment by Zhaojin.
Lu told Xinhua that Zhaojin has also been looking for "proper gold miners" in Central Asia and one of the criteria is that the investment destination country has to be politically stable.
Lu noted that China has surpassed South Africa as the world biggest gold producer since 2007 and produces over 300 tons of gold annually.
"Zhaojin is quite confident that the gold production will see further growth in China. We can dig deeper as most of Chinese gold mines are still being excavated at about 500 meters below the ground while gold pits in South Africa are more than 4,000 meters deep," Lu said, adding that within five or six years from now, the company will be among the world top ten gold miners.
