China's gold production is expected to rise by more than 10% in 2011 from a year ago period. During the first half of the year, China's gold output grew by 5.18 tonnes, or 3.25% year on year to 164.42 tonnes, said the Ministry of Industry and Information Technology.
In June alone, the country produced 32.39 tonnes of gold, according to a statement on the ministry's website. The combined output value of Chinese gold producers amounted to $18.55 billion during the first half, up 23.37% from a year ago period.
Moreover, the gold producers' first half profits jumped 34.19% year on year. China is the world's biggest gold producer, having raised production every year since 2004. In 2010, output was pegged at 340.880 tonnes, up 8.6% from 2009.
In a recent report on the Chinese gold market, J P Morgan has noted that the China Gold Association expects Chinese gold investment demand to double within the next two years.
"Going forward, we believe the widening structural deficit in the supply and demand picture, long term demand for gold jewellery in China, India and other developing countries, persistent concerns regarding inflation, as well as the less transparent factor of sovereign purchases (that is likely to skew demand to the upside), will continue to give long term support to gold prices,'' the investment banker has said in a note to its clients.
In 2007, China made the most of its cost advantage to become the world's largest gold producing country, replacing South Africa. Analysts said China had long anticipated taking the No 2 position from the United States in 2009, but the rapid decline in output in the traditional major gold producing countries gave China the title about two years ahead of its own expectations.
Gold production is concentrated in the eastern provinces of Shandong, Henan, Fujian and Liaoning in China. Remote western provinces such as Guizhou and Yunnan, which have vast quantities of the yellow metal, has also attracted keen investment interest from firms in Australia and Canada.
Sajesh Patel, investment consultant at a foreign bank here said, ``China's gold output has been increasing for three consecutive years along with the rising prices. According to the China Gold Association, China's output of gold in 2009 totaled 314 tonnes, an increase of 11.34%. Despite this, the country imports about 100 tonnes of gold each year.''
Analysts have added that China is finding new gold reserves faster than it is producing the precious metal.
Source: http://www.mineweb.com
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