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Shanghai free trade zone to host gold warehouse

By Gao Changxin in Shanghai | China Daily | Updated: 2013-11-15 07:40

A 2,000-ton gold warehouse will be operational this month in the China (Shanghai) Pilot Free Trade Zone, as global gold traders look to the zone as a gateway to China's huge gold demand.

The warehouse, which is the size of three basketball courts, was developed by Malca-Amit Global Ltd, a Hong Kong-based company that focuses on the storage and transportation of precious metals and diamonds.

All the paperwork has been done, construction is already finished, and a promotional campaign is on the way to attract local clients. Wu Hong, who is in charge of the operational side of the new warehouse, said that the total investment was a seven-digit figure in US dollar terms but declined to give the exact amount. The warehouse, the first of its kind in the zone, can also be used to store artwork, luxury products and diamonds.

The local business registration date shows that the warehouse was incorporated last September under the name Shanghai Malca-Amit Logistics Co Ltd. The registered capital stands at 8 million yuan ($1.3 million).

The Shanghai warehouse is the seventh globally for Malca-Amit, and Wu said it was built in response to the strong demand from the company's global clients, who are eager to tap deeper into the Chinese market via the FTZ. Wu said that Malca-Amit's clients include big multinational banks and major bourses, while refusing to provide names.

Trading gold via the FTZ will have many advantages. Previously, if a Chinese buyer wanted to import gold, he had to get government approval first, shop abroad and then ship the precious metal back to China. The whole process could take months and price changes during the process could cause the buyer significant losses. Now, foreign sellers can ship the gold to the FTZ first and then deal with local buyers whenever there's an order.

Wu said the warehouse is in talks with local institutions, including Bank of China Ltd, Industrial and Commercial Bank of China Ltd and the Shanghai Futures Exchange, for future deals.

At the end of September, China's central bank said it is mulling an increase to the number of firms allowed to import and export gold and will also ease restrictions on individual buyers. It's widely expected that the policies, if put in place, could further boost demand in China, where gold typically trades at a premium to London spot prices.

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