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China gold firm Zijin posts first profit rise in 3 yrs
March 20, 2015 / 1:40 PM / 3 years ago

China gold firm Zijin posts first profit rise in 3 yrs

HONG KONG, March 20 (Reuters) - China’s largest listed gold producer Zijin Mining Group reported net profit growth for the first time in three years in 2014 but expects gold prices to hover at low levels due to the global economy slowdown.

The company expects prices of gold and base metals to stay relatively weak as China’s economic growth is expected to slow to about 7 percent, while emerging economies such as India also face pressure.

Net profit rose 10.3 percent to 2.3 billion yuan ($370.75 million), Zijin said in a filing to the Shanghai stock exchange on Friday, marking the first net profit growth since 2011 when earnings rose 18.3 percent.

Zijin attributed the profit rise to cost-cutting measures such as shutting down obsolete production lines to weather dismal global metal prices.

Gold prices fell 1.8 percent in 2014, partly pressured by weak Chinese demand. Gold prices are now hovering at $1,180 an ounce, which are still well below a 2011 peak near $2,000.

Chinese demand last year fell nearly one-third, data from GFMS at Thomson Reuters shows. It was the first drop in 12 years, as an anti-graft drive by the government eroded sales of jewellery and precious metals, adding to the impact of slowing economic growth.

Smaller rival Shandong Gold Mining Co Ltd saw its 2014 net profit fall 24.6 percent, marking the second straight year of declines due to weak global gold prices.

Shanghai jeweller Lao Feng Xiang Co Ltd posted a 5.6 percent rise in its preliminary net profit in 2014, its weakest performance since 2008 when net profit fell, according to Eikon data.

Zijin’s results came after the stock market closed. Its Shanghai-traded shares closed 0.8 percent lower, lagging the main Shanghai composite index’s 1 percent rise. Its Hong Kong-listed shares closed up 0.9 percent, outperforming the main Hang Seng index’s 0.4 percent fall. ($1 = 6.2037 Chinese yuan renminbi) (Reporting by Meg Shen; Editing by Keith Weir)

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