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46 www.resourceworld.com D E C E M B E R / J A N U A R Y 2 0 1 7 U ntil recently, gold had regained its shine as one of the stron- gest performing asset classes in 2016 which brought a strong renewal of interest back to the gold sector. However, an inves- tor group that never lost its interest over the last several years is China. Having read CPM Group's 2016 Gold Yearbook, which focuses on the real fundamentals of supply and demand for gold, it highlighted the tremendous significance China has in the global marketplace as both the largest producer and consumer of the precious metal. Rohit Savant, Director of Research, CPM Group, highlighted current events taking place in China impacting the gold price, "In 2016, there has been an increased interest in demand for gold ETFs in China. Much of this demand has been from institu- tional investors that have been buying gold. The China Insurance Regulatory Commission (CIRC) has given insurers the green light in 2016 to invest in gold and gold-related products, further expanding the scope of potential investments. "The idea is to diversify investments made by these insurers, which are usually in fixed-income, equities, and real estate. The first step for Chinese insurers is to trade on the Shanghai Gold Exchange (SGE) and invest in gold ETFs in the country. There has already been an increase in the amount of money flowing into gold ETFs and these insurers have started recruiting traders to prepare for trading on the SGE. If the initial investments can generate desir- able returns, more money will be diverted toward gold." Transitioning into the fundamentals of supply, gold mined across the globe in 2016 is projected to total 93.35 M ounces according to CPM Group. Including secondary supply (recycled gold) this figure rises to 113.8 M ounces of available supply. Gold production from China in 2016 is projected to be an astound- ing 14.85 M ounces of gold which is 16.23% of global gold production. China is host to 10 of the 27 gold mines to come online between 2017 and 2019. The production capacity of the 10 new gold mines in China would add 1.02 M ounces of gold to annual domestic production. The largest gold development project is the Yangshan Mine owned by the China National Gold Group which hosts reserves of 9.9 M ounces and would produce 321,510 ounces of gold when operating at full capacity. China National Gold Group Corporation is the centrally state- owned enterprise for the gold industry in China. China National Gold has aligned goals with the country to back China's economy with gold while also working towards establishing the Yuan as a future global currency. One of the two subsidiaries of China National Gold is China Gold International [CGG-TSX; 2099-HKG: 2099], a CDN $1.3 billion gold and copper producer headquartered in Vancouver, Canada. The company operates the CSH gold mine in Inner Mongolia and the Jiama copper-polymetallic mine in Tibet. The CSH gold mine is one of China's largest gold mines accord- ing to China Gold International. It has experienced strong production growth seeing gold output rising from 111,000 ounces in 2010 to 204,000 ounces in 2015 resulting in a compound annual growth rate of 13%. This was mainly attributable to the mines expansion of the daily ore processing capacity to 60,000 tonnes per day in 2015. The company is forecasting 2016 gold output from the CSH gold mine to be 219,000 ounces. The company is also the exclusive international resource acqui- sition vehicle and the flagship overseas platform of China National Gold which is a 39% shareholder of China Gold International. In May 2015, the Chinese government announced the New China and gold's fundamental relationship iT's hard TO OVersTaTe The iMpOrTanCe Of GOld in China by andrew nelson a gold pour at the Chang Shan Hao (CSH) Gold mine in Inner mongolia, a low-grade, bulk-tonnage gold mine. photo courtesy China Gold International resources Corp. Ltd. miNiN g