Energy & Resources


The lucky tael of Shanghang County’s new millionaires


"Listen carefully, 007, the world's biggest gold producer is now China"

China’s Communist Party may have struck political gold in 1949, but that year the nation itself only produced 4.5 tonnes of the precious metal, according to the Shanghai Daily.

How times have changed. China mined 282 tonnes of gold in 2008, making it the world’s largest producer for the second year running.

And nowhere is the sense of gold rush greater than in Shanghang County in Fujian, home to Zijin Mining. The company has become famous throughout China for turning ‘10,000 households into millionaires’. And all within 10 years.

An intrepid journalist from the Qianjiang Evening News managed to track one such lucky individual down, a Mr Wang – one of Zijin’s original shareholders. “Who told you my number,” queried an initially hostile Wang. “Are you calling from the Mercedes dealership again?”

But after being informed that the reporter had tracked him down through the shareholder register he calmed down, admitted he had not sold any shares and confessed to his good fortune. His Zijin stock is worth Rmb9.43 million ($1.38 million), a vast increase on an original investment of Rmb10,000 in 1998.

Wang works for a local state-owned firm, and was targeted by Zijin when it was raising venture funding just after the Asian financial crisis. The price of gold was low, and there wasn’t much interest among his colleagues. However, the salesperson from Zijin was a friend, so Wang bought 10,000 shares.

There’s something to be said for friendship. In this case, Zijin went from strength to strength and after listing in Hong Kong in 2003, each original share was turned into 10. After further stock splits, Wang’s holding rose to 1 million shares. The stock was listed in Shanghai last year, and has soared in value again.

Wang’s is a happy story. But he is not alone: 436 other Shanghang locals also own around Rmb9 million worth of the gold miner’s stock.

Yet for tales of untold wealth, look to the management of Zijin. Chen Jinghe, the chairman and president of the company, holds 115 million shares worth Rmb1.08 billion. Ke Xiping, a non-executive director, holds a position worth Rmb3 billion. But the biggest winner is the province’s richest man, Chen Fashu – who was asked to invest by the local government – has a stake valued at Rmb4.1 billion.

Not everyone is celebrating. Back in the early days, some of Zijin’s mining staff weren’t that hopeful about the firm’s potential. They had been forced to invest in the firm through their trade union, but were happy when the canteen contractor agreed to take their stock off their hands as “meal tokens”. As it turns out, those were expensive bowls of noodles.

“For those employees who used their Zijin shares as meal tokens it is certainly too late for regrets,” rues the Qianjiang Evening News. But for the 163 employees who kept their stock this is a golden age indeed.

According to the Chengdu Evening News, Zijin’s performance remains an “eye-catching” one, with operating income of Rmb4.95 billion in the first quarter. And with China having revealed that it has increased its gold reserves to 1,054 tonnes, there is hope among the world’s bullion analysts that prices will go higher. More good news for Zijin and the millionaire householders of Shanghang County.

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