The Bandit Circus

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Except from GOLD by MATTHEW HART, author of DIAMOND

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In 1993, to encourage exploration and expand its gold reserves, China loosened regulations and opened the door to foreign miners. Even Chinese state-owned companies could now raise exploration money by selling shares to private investors. One large foreign gold miner to take advantage of the opportunity was Place Dome Inc., an international miner based in Vancouver. Place Dome had been doing business in China since the 1960s, supplying copper and molybdenum to China National Nuclear Corporation. In 1997, through its Australian subsidiary, the company hired two Chinese geologists, formed Placer Dome (China) Ltd., and started looking for gold.

In 1997 China was the world’s fifth-ranked gold producer. Largely unexplored by Western standards, China looked like a rosy prospect. Not only had the country loosened restrictions, but the all-important Five-Year Plan, the government’s regular economic manifesto, made the restructuring of the mining industry a key objective. Place Dome had a five-year of its own; train Chinese staff to higher standards,; demonstrate that ‘Large mineral systems” existed in China; and get the clear title they would need to develop them. They did train up their staff, they found a target, and in five years had their business license. When it was time to lock up title, here’s a partial list of what they learned:

three different levels of government can issue title

not all title information was on the same register

access to the registers was limited

access to state geological data was limited

topographic data was a state secret

reserve calculations were not based on international market standards

owners’ share of revenue would be “modest”

In the end Place Dome got nothing but the transfer of expertise to China.

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