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China has recently claimed to have discovered the world’s largest gold mine, estimated to house more than 1,000 tons of gold. The $83 billion deposit could be a major boon to the nation’s de-dollarization efforts as it looks to shore up economic security with physical gold. News of the discovery jolted gold prices to the upside which have been sideways since the US presidential election.
The Mine At a Glance
The Geological Bureau of Hunan Province (GBHP) claims to have unearthed the most valuable and expansive gold mine to date. Through state-of-the-art 3D modeling techniques, geologists mapped out over 1,000 tons of gold ore beneath an already explored deposit of 300 tons. Here’s a breakdown of some key facts about this colossal reserve:
- Location: The reserves rest deep in the Wangu gold field in the Hunan Province of southeastern China.
- Reserves: Geologists estimate 1,000 tons of gold ore at 3,000 meters deep and 300 tons at 2,000 meters.
- Value: At current gold prices, the mine is estimated to contain $83 billion (600 billion Yuan) worth of gold.
- Ore Quality: The ore is claimed to boast 138 grams of gold per metric ton, an extremely rich concentration.
- Size: The Hunan mine could be the most extensive gold deposit ever uncovered, surpassing the previous record-holding South African mine, which contains 900 tons, by 10%.
- Mining Operations: China hasn’t announced any plans to develop the mine, suggesting extraction might be years away.
Experts Raise Doubts
As reports of China’s “super-giant” mine circulated the world, experts at the World Gold Council (WGC)—the gold market’s foremost authority—raised doubts over some of the claims. John Reade, senior market strategist, recommends taking initial reports in stride.
According to Reade, the claim of the shallower 300-ton deposit is “reasonable”, but “the 1,000-tonne potential resource sounds aspirational”, suggesting more drilling is needed to confirm the estimates and dispel any skepticism. Furthermore, Chinese mining isn’t subject to the same reporting standards as many Western nations.
Possible Impact on Global Gold Supply
China’s newly discovered mega-mine is unlikely to impact the gold supply, at least not immediately. Even if initial figures ring true, the Hunan deposit would only account for 1% (on the high end) of the global gold supply. Reade points out that worldwide production hovers around 3,600 tons and this mine would only produce 15 to 30 tons yearly. The depth of the deposits at 3,000 meters further complicates matters as extraction would take years and significant investments.
Boosting China’s Reserves & Influence
China’s golden discovery might not have a huge impact on global supply but could bolster the country’s bold geopolitical and economic aims. For decades, the Chinese Communist Party (CCP) has been fighting to topple the dollar’s dominion and replace it with the yuan. The country has been growing its gold holdings at record rates and even instituted gold-buying quotas.
If all 1,000 tons of gold were to be extracted and held within the country, China’s gold reserves (currently estimated at 2,264.32 metric tons) would grow more than 44%. This move would elevate China to the third-largest gold reserve holder globally, trailing only Germany and the United States.
This newfound economic stability could fuel China’s efforts to create a multi-polar economic landscape. As the ringleader of the BRICS coalition of emerging economies, the CCP has tremendous sway in the de-dollarization movement. Gold is the sturdy foundation upon which these countries are building their dollar-independent future, and this discovery could mark a pivotal step in achieving their objectives.