The first ever such auction in China attracted four companies from within the province and from Hong Kong. The South Mechanic and Chemical Project Ltd. secured the four-year mining rights for 2 million yuan (US$241,000).

Lin Jun, consignor of the winner company, was surprised that every enterprise was treated equally. "It was unbelievable in the past to have mining rights of a gold mine for a private company," he said.

Gold has long been a special mineral tightly controlled by the government and in the past only authorized state-owned enterprises were eligible to get the mining and prospecting rights. They also did not have to pay for the mining rights.

"The auction marks a breakthrough in China's mining industry," said Zeng Shaojin, director of the Mineral Development Administration under the Ministry of Land and Resources.

He maintained that it was a signal of China's opening in the mining rights market.

China stopped granting free mining rights in 1998. So far, 21 provinces have transferred the rights for the mining of minerals other than gold to non-traditional institutions. Of these, 14 provinces have successfully sold mining rights by auctions.

According to government regulations, this first auction of a gold mine was open only to Chinese companies. US-based Behre Dolbear, an international minerals industry consulting company, showed interest but regrettably sat aside.

Foreign capital can be used to process and refine minerals in China, according to the ministry source. Foreign companies can bid in mining rights auctions so long as they register companies or establish joint ventures in China.

Official statistics show that China's demand for gold is more than 300 tons every year. Gold with jewels have the third largest consumption after real estate and autos.

(Xinhua News Agency August 19, 2002)