(Yicai Global) Jan. 16 -- China’s largest gold producer Zijin Mining Group will participate in the bidding for the prospecting rights to the country’s biggest lead-zinc mine with a starting bid of CNY22.3 billion (USD3.3 billion). If successful, the gold miner will become the second largest lead-zinc producer in the world.

Zijin Mining is hoping to secure the development rights to the Huoshaoyun lead-zinc mine in Hotan, northwestern Xinjiang Uyghur Autonomous Region, which has an estimated 1.8 million tons of high-grade zinc-lead reserves, the Longyan, southeastern Fujian province-based firm said on Jan. 13.

Stretching across 292.2 square kilometers, the Huoshaoyun mine has the biggest lead-zinc deposits discovered in China to-date. The zinc grade is estimated to be 23.3 percent and the lead grade 4.6 percent. It also has cadmium and gallium resources. The thick belt of ore lies close to the surface of the earth and most of the mining is expected to be open pit mining.

However, the Huoshaoyun mine is located high up in the Kunlun mountains at an altitude of 5,600 meters, making access extremely difficult. Logistics, water supply and power supply are all very poor, said Zijing Mining, which currently ranks fourth in the world in terms of zinc output and sixth and ninth in terms of copper and gold production.

The successful bidder will be required to make a downpayment of CNY6.6 billion (USD984 million) and the remaining funds should be paid in equal annual installments over a 10 year period, the company said, citing the tender documents.

Should it win the bidding, Zijing Mining will be required to build a mine that conforms with green standards with an annual ore output of not less than two million tons and a smelting capacity of over 600,000 tons, it said. And construction must be completed within three years of acquiring the rights.

The winning bidder should also set up ore processing businesses in the area with a combined annual output of not less than CNY15 billion (USD2.2 billion) and over half of the employees should be from the local area.

Zijin Mining's mainland-traded shares [SHA:601899] dipped 0.3 percent to close at CNY11.51 (USD1.70), while its Hong Kong stock [HKG:2899] dipped 0.4 percent to trade at HKD12.42 (USD1.60) as of 3.45 p.m. China time today.

Editor: Kim Taylor