Nation's gold industry sets a 24-carat example

CHINA, which may surpass the United States to become the second-largest gold producer this year, mined 15 percent more of the metal in the first half.

Higher prices prompted companies to boost output, Bloomberg News reported.

Production rose at the fastest pace in 10 years to 122.5 metric tons in the first six months, the China Gold Association said on its Website on Thursday. Gold output in June was 23.6 tons, it said.

Gold for immediate delivery averaged US$658.41 an ounce in the first half of this year, 11 percent more than a year earlier.

The higher prices also drove mining companies to explore for new resources in the provinces of Qinghai, Gansu and Fujian, the association said in the statement.

"Increased capacity will keep China's gold output rising fast even if prices decline in the near future," the statement said.

Gold production in China has been rising since 2000 and is likely to surpass the US as the second-biggest producer this year, the association said.

South Africa is the largest gold producer.

China, which ranked fourth in 2006, became the No. 3 producer this year, replacing Australia, Wu Junyun, vice general manager of international trading for China National Gold Group Corp, said on June 8.

China National Gold controls the nation's second-biggest publicly traded gold miner. Profit at China's gold producers rose 40 percent to 3.47 billion yuan (US$458 million) in the first half, and jumped 85 percent in June from a year earlier, the statement said.

The cost of production for China's gold mining companies was 130.6 yuan a gram, 34 percent higher than the global average of US$401 in the first half, the statement said.