New Material Intelligence NMT | Seen the danger and opportunity of Zijin Mining from the investment logic of copper industry

After a year of downturn, Zijin Mining’s share price finally set off a small climax last week, making the popularity of the downturn noisy again. The debate about how long the red flag can float and whether it has ended the shock and started the reversal is very lively, which is the charm of resource stocks and cycle stocks.
Zijin Mining is a leading enterprise in the integration of mineral resources development and investment in the world, with the largest reserves of gold, copper and zinc resources. In the first half of this year, the company achieved operating income of 132.458 billion yuan, up 20.57% year on year; The net profit attributable to the parent company was 12.63 billion yuan, up 89.95% year on year; The net profit attributable to the parent company was 12.024 billion yuan, up 96.71% year on year. Although the company’s performance in the midterm report is bright, the stock price before and after the midterm report is not surprising, and still maintains a range of fluctuations. A large part of the reason lies in the huge divergence of investors’ expectations of Zijin Mining (especially new energy).
New Material Intelligence NMT | Seen the danger and opportunity of Zijin Mining from the investment logic of copper industry
Chengye copper price and loser copper price
The rise in the share price of resource-based enterprises stems from the rise in the price of products and the increase in product output. With the intensification of geopolitical conflicts and global resource competition, resource shares still have the advantage of allocation in the medium and long term. For the whole sector, the improvement of valuation is due to the price rise or price rise expectation of products. For the non-ferrous metal sector, the root cause of the rise of the sector is the rise of metal prices.
Once the resource unit is launched, it will be overwhelming. In the last week and even in the last month, the sharp rise in copper prices has driven Zijin Mining’s share price to break through quickly. With the smooth operation of key projects such as the upper belt mine of the Pegi Gold Mine in Serbia, the Kamoa-Kakula Copper Mine, and the Julong Copper Mine in Tibet, the company’s copper and gold output has significantly improved; In the first three quarters, the company’s output of mineral gold, copper, zinc and silver concentrates was+18.94%,+54.98%,+4.83% and+20.84% respectively year on year; The output of gold/copper/zinc in smelting and processing trade was+1.76%/+13.14%/- 1.80% year on year respectively. It is easy to understand that copper metal futures prices have broken through the box and driven Zijin Mining’s share price to rise rapidly in the recent period. Similarly, when the copper price is low, it is quite painful for both the market value of listed companies and shareholders.
In recent years, Zijin Mining has been questioned about its growth space. Although it has a comparative advantage in gold, copper and other metals, its lack of novelty in the new energy market has made it widely questioned, seriously limiting Zijin Mining’s imagination space.
Embrace lithium ore, seemingly slow but actually fast
There is a saying in the stock market that “I can dig what others can’t dig, and I can earn what others can’t dig”, comparing Zijin Mining to a low-cost and efficient innovative cash machine. In the past two years, new energy vehicles have suddenly erupted without warning, which has led to the rapid differentiation of calm resource stocks. Supporters of Zijin Mining have quickly turned to the concept of “lithium”. Traditional resource stocks such as Zijin Mining are facing the fate of being abandoned, which is very real in the stock price. It is said that it is difficult for the ship to turn around, but Zijin Mining is an exception. This is Zijin Mining’s decisive power. Although it starts late, once it sees the opportunity, it will go all out. It seems like a crisis of falling behind. Unexpectedly, it has opened the second growth curve.
The company has formed a “two lakes and one mine” layout for new energy minerals, and has basically completed the layout of lithium plate and started to transform to new energy. At present, Zijin Mining’s overall lithium carbonate equivalent resources have exceeded 10 million tons. The total resources of Argentina’s 3Q salt lake lithium mine project are about 7.565 million tons of LCE, including 1.845 million tons of high-grade resources (expected to be completed and put into operation by the end of 2023); Tibet Laguocuo Salt Lake Lithium Mine Project holds 2.14 million tons of LCE (it is expected to produce more than 50000 tons of lithium carbonate annually in 2025); The Xiangyuan lithium polymetallic mine in Daoxian County, Hunan Province is initially planned to build a mine of 10 million tons per year, with an annual output of 60-70000 tons of lithium micaceous hancarbonate equivalent (the first to restart the 300000 tons per year mining and dressing system).
In addition, Fuda Zijin’s ammonia and hydrogen energy industrialization has accelerated, and the construction of lithium iron phosphate, electrolytic copper foil, high-performance copper alloy and other projects has accelerated; Zijin Lithium plans to jointly build a lithium salt project with an annual output of 90000 tons with Yiwei Lithium Energy and Ruifu Lithium by stages. In such a short time, to complete such a strong and in-depth layout, we have not only seen the executive power of Zijin Mining, but also its determination to transform into new energy, which undoubtedly reassured investors.
Zijin Mining’s total lithium carbonate equivalent resources have exceeded ten million tons, ranking the top ten among the world’s major lithium enterprises in terms of resources, and its long-term planned lithium carbonate equivalent annual capacity is also more than 150000 tons. At the same time, BYD and GAC and other domestic traditional car companies have completed the counterattack against the new forces of car building, such as Wei Xiaoli, and the rapid expansion is imminent. With the rapid release of new energy vehicles, enterprises with a large amount of lithium reserves can quickly catch the new energy express and go steady. This opportune ride will further expand the growth space of Zijin Mining.