The transition from winter to spring in 2020 was indeed a challenging period. Similarly, the gold industry, under the shadow of the COVID-19 pandemic, also underwent a rigorous test. Yet, throughout its history, the gold industry has always faced difficulties and setbacks with unwavering courage. As the epidemic situation improved, gold-sector professionals—who had long been prepared to resume work and production—adopted a resolute and steadfast attitude and implemented well-founded, effective measures, thereby securing a hard-won strong start to the first quarter. Building on this momentum, they are now pressing forward to achieve the “double-half” targets and fulfill the year’s overall objectives.

The first quarter of 2020 thus passed amid the pandemic. Looking back over the past three months, sectors such as catering, entertainment, and services have been hit hard, while the mining industry has also struggled under the impact. According to data from the National Bureau of Statistics, from January to February, the total profits of the national mining sector amounted to RMB 55.31 billion, a year-on-year decrease of 21.1%.

Production and operations in the gold industry have also been hampered. According to surveys and statistics compiled by the China Gold Association, as of the end of February, the planned completion rate for mined gold output among key national gold enterprises stood at 67.73%, a year-on-year decline of 33.24%—a drop that has further widened; meanwhile, the planned completion rate for refined gold output was 85.12%, down 19.94% from the same period last year.

However, as China’s gold enterprises stepped up their efforts in the latter part of the year, many still managed to achieve a strong start to the first quarter this year despite significant challenges, injecting a much-needed boost into the Chinese gold industry and broader economic development amid the pandemic. This also bolstered confidence in the ability to stay on track with the full-year targets and maintain the set performance indicators.

“A strong start” is not easy.

As of March 20, Shandong Gold Group had cumulatively produced 11,587.55 kilograms (approximately 11.6 tonnes) of gold in the first quarter, representing 25.05% of its annual production target. Gold output increased by 65.39 kilograms, or 0.57%, year on year, thereby achieving a strong start to the year in gold production.

At a time when the nation was severely hit by the pandemic, Shandong Gold defied the trend and achieved its first-quarter targets 11 days ahead of schedule—a surprising outcome. In fact, many other Chinese gold companies have also enjoyed a dream start to the year.

Wang Jianqiang, Chairman and President of Yunnan Gold Mining Group Co., Ltd., stated that, based on both output levels and key production metrics, Yunnan Gold Group successfully achieved all its targets in the first quarter of this year.

As most gold mining companies had completed inventory stocking and production reserves before the Spring Festival, they were relatively less affected by the pandemic. In particular, with the gradual resumption of work and production in March, mining operations under entities such as Shandong Zhaojin Group Co., Ltd. and Hunan Gold Group Co., Ltd. have largely achieved their production targets.

“In the first quarter, Jinfeng Company’s cumulative gold production reached 27.3% of its annual target, up 4.68% year on year, while its profit attainment stood at 43% of the annual plan, representing a year-on-year increase of 6.67%,” Gao Rong, Party Secretary and Chairman of Guizhou Jinfeng Mining Co., Ltd., told reporters with evident satisfaction.

Mining enterprises such as Inner Mongolia Mining, Inner Mongolia Taiping, and Liaoning Paishanlou have all successfully completed their first-quarter targets, laying a solid foundation for China Gold to achieve its full-year objectives.

Of course, not all companies can achieve a strong start to the year. According to Lv Xiaozhao, Vice Chairman of Chifeng Jilong Gold Mining Co., Ltd., the company only maintained normal production for 60 days in the first quarter, resulting in a 20% year-on-year decline in gold output. However, in late March the company ramped up ore extraction, boosting first-quarter output by 28.5%, while a series of cost-reduction and efficiency-enhancement measures led to a 10% drop in costs.

Although Hunan Gold Group’s mineral output remained broadly flat year on year, its operating performance was severely impacted by sharp declines in the prices of copper, lead, and zinc, as well as difficulties in exporting antimony and tungsten. Meanwhile, Shandong Zhaojin Group saw across-the-board declines in all key metrics across its precious-metal deep-processing value chain in the first quarter, driven by a substantial drop in sales of gold and jewelry products.

As the pandemic gradually stabilizes, China’s economy is also steadily getting back on track. According to data from the National Bureau of Statistics, as of March 25, the resumption rate among large and medium-sized enterprises surveyed in the national purchasing managers’ survey reached 96.6%, an increase of 17.7 percentage points from the February survey results. With a strong start in the first quarter as a solid foundation, Chinese gold companies are sure to be even more confident about the next three quarters.

Adopting a multi-pronged approach to mitigate the impact of the pandemic

Achieving any success is no easy feat, and securing a strong start during the pandemic makes it all the more commendable.

Following the outbreak of the pandemic, Shandong Gold Group Co., Ltd. promptly formulated plans for organizing production and operations during the epidemic prevention and control period, comprehensively coordinated and deployed production and business activities across all its subsidiaries, addressed bottlenecks that were constraining output, and tapped into the full production potential of its enterprises. At the same time, each subsidiary optimized its production organization by reallocating staff from secondary and tertiary lines to reinforce frontline production, actively facilitating the return of employees to work and the timely delivery of materials and supplies, and making every effort to resolve challenges such as labor shortages and supply constraints, with the goal of minimizing the impact of the pandemic.

A major challenge facing Yunnan Gold Group is the shortage of mining and tunneling personnel. To address this, the group has proactively made arrangements to bolster its construction workforce as much as possible and, with the support of local government authorities, has ensured a stable supply of ore.

Lv Xiaozhao also stated that, in order to offset the impact of the epidemic in January and February, Chifeng Gold has, since March, set specific targets and measures, ensuring their implementation at the team and employee levels, with management personnel deployed to the front lines to provide on-site guidance and command. In addition, the company has launched labor competitions and introduced incentive programs, striving to achieve more than half of both time and tasks in the first half of the year.

Most mining enterprises are located in remote areas, which facilitates closed-loop management and provides a solid foundation for epidemic prevention and control, enabling them to resume production at the earliest possible opportunity once employees return to work. For example, Jinfeng Company suspended rotational leave during the pandemic and implemented closed-loop, controllable management of its operations on site. In response to the impact of the pandemic on production, Jinfeng Company scientifically broke down tasks, dynamically adjusted production schedules, and maximized mining output. At the same time, it optimized production processes, improved technical performance indicators, increased equipment utilization rates, and ensured the smooth continuation of operations.

“This epidemic has underscored the superiority of Jinfeng Company’s internationalized management model, with production virtually unaffected and a successful ‘strong start’ achieved,” said Gao Rong.

Liaoning Paishanlou has also leveraged Douyin short videos to actively expand its external ore procurement channels. As of the end of March, it had identified 16 new potential partner clients and signed six external ore procurement contracts, which are expected to increase gold production by more than 60 kilograms.

Since the first quarter, China’s gold industry has been temporarily hampered by the pandemic, with production and operations facing significant challenges. However, thanks to the united efforts and unwavering determination of all professionals in the sector, the industry has now returned to a steady track.

The goal remains unchanged—let’s roll up our sleeves and work hard!

“Our annual targets for this year remain unchanged, and at present the situation does not appear to be a major concern. Although construction projects are currently 30% behind schedule, we are confident that, with concerted efforts over the final three quarters, we can largely offset the impact of the pandemic,” Wang Jianqiang said with great confidence.

The goal remains unchanged, a conviction shared by major key gold enterprises such as China Gold Corporation and Shandong Gold Group. Riding on the strong start to the year in the first quarter, these companies remain optimistic about achieving their full-year targets. Even those that did not secure a “strong start” are working diligently to make up for lost ground and attain the target.

At the mobilization conference for tackling key tasks, Wang Zhanbin, Party Secretary and Chairman of Zhaojin Group, emphasized that the annual production target would remain unchanged, as would the targets for profitability and the level of fiscal contribution. “To achieve these goals,” he said, “we must focus on the most pressing priorities, adjust our work priorities in light of the current situation and local conditions, strengthen the guiding role and effectiveness of supporting policies and institutional measures, and concentrate on forging three major strategic tools: first, ensuring that incentive mechanisms are precise and fully implemented; second, swiftly putting accountability mechanisms into place; and third, implementing assistance mechanisms through ‘precision drip irrigation.’”

Liu Yongsheng, Deputy Secretary of the Party Committee and General Manager of Zhaoyin Group, also stated that the remaining nine months of this year must be used to strengthen production organization and scheduling, enhance management and operations, make up for lost ground due to epidemic prevention and control, restore production targets, improve business performance, and do everything possible to recoup the losses caused by the pandemic.

Most of Chifeng Gold’s key mines are located in high-altitude, cold regions, making production and operations a significant challenge in the first quarter. “Our current goal is to achieve ‘more than half’ on both the output and revenue fronts, and then build on that to meet our full-year targets,” said Lü Xiaozhao. “In addition, although Chifeng Gold’s Sayabouly copper-gold mine in Laos was largely unaffected by the pandemic in the first quarter, the global outbreak will inevitably impact it going forward. Therefore, we are aiming to commence production at the oxide gold mine in the third quarter.”

Meanwhile, Hunan Gold Group has taken a different approach: amid current operational challenges, it is focusing on developing new business lines to diversify its revenue streams. “At present, Hunan Province is vigorously supporting sand and gravel mining, and there is also strong local demand for these materials. We plan to seize this opportunity to expand into this sector, thereby offsetting the decline in profitability,” said Wang Junmin, Deputy General Manager of Hunan Gold Group.

Even Hubei Sanxin Gold & Copper Co., Ltd. and Hubei Jilongshan Gold Mining Co., Ltd., which have just resumed work and production, are striving to make up for lost schedule milestones, mitigate the impact of the epidemic, and do their utmost to ensure the successful completion of their annual production targets.

The first quarter has already passed, and spring has arrived. Although the pandemic has created some ripples in the production and operations of China’s gold enterprises, over the next three quarters these companies will undoubtedly continue to rise to the challenge and bring 2020 to a successful close.