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DJ China Set To Be Largest Gold Producer By 2009 - Consultant
[April 25, 2006]

DJ China Set To Be Largest Gold Producer By 2009 - Consultant

(Comtex Finance Via Thomson Dialog NewsEdge)Apr 25, 2006 (Dow Jones Commodities News via Comtex) --By Alison Guerriere Ciaccio


NEW YORK - As vast portions of China are yet to be explored, output of gold mine production is on the rise and could even surpass South Africa as the largest gold producer within four years, said a New York-based commodities consultant.

During the Dow Jones Metals Finance 2006 conference here, Jeffrey Christian, managing director of CPM Group, said Chinese gold mine production has risen 121% from 3.2 million ounces in 1990 to 7.1 million ounces in 2004.

"Gold refined production has risen even more sharply as Chinese base metals smelters process imported gold bearing concentrates as well as domestic mine output and scrapped jewelry and electronics," said Christian.

For the silver market, estimates of Chinese silver mine production were around 5.5 million ounces in 1990 while 2004 was around 83.6 million ounces. With production growing, Christian said China is on track to becoming the third largest silver producer at 84 million ounces.

Currently China is among the top four producers following Mexico, Peru and Australia.

Chinese exports of silver are expected to rise to around 50 million ounces for 2006 to Zurich, Switzerland; Saudi Arabia; India; Hong Kong and other destinations, said Christian.

The growth in demand from China is expected to be a long, slow process, reflecting the slow rise of much of the population's disposable incomes.

For commodities in general, Christian said returns on competing assets have languished leaving investors to "chase returns" in the commodities markets.

Christian contends that the commodity boom has less to do with a "commodity super cycle" and more with basic economics.

"Commodities prices generally have fallen since the Industrial Revolution began (in) inflation-adjusted terms, as the cost of production for most commodities has plunged and discovery, production and use of raw materials have become more efficient," said Christian.

He noted that the few periods of extended prices increases have coincided with World Wars and other global cataclysms.

-By Alison Guerriere Ciaccio; Dow Jones Newswires; 201-938-5959;

(END) Dow Jones Newswires

04-25-06 0906ET

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