Zijin Mining speeds up plans to become a world top three in copper & gold Posted by Paul Moore on 9th February 2023
On January 30, Zijin Mining released its revised Three-Year (2023-2025) Plan and 2030 Development Goals. Among others, highlighted targets include building a largely complete global operation and management model and striving to catch up with first-rate international metal miners by 2025; and pushing up performance across the board to the top tier of the global mining industry by 2030, aiming to rank in the top 3 to 5 in copper and gold production and the top 10 in lithium production.
Its list of mines is truly impressive already, most recently adding the Rosebel gold mine in Suriname, acquired from IAMGOLD. Other overseas mines include the Rio Blanco copper and molybdenum mine in Peru; the 3Q Lithium project in Argentina; 45.04% ownership of the Kamoa-Kakula copper mine in DRC; the Čukaru Peki copper gold mine in Serbia; the Kolwezi copper mine in DRC (72%); 63% of the Bor copper mines in Serbia; 69.28% of the Buriticá gold mine in Colombia; plus the Paddington gold mine in Western Australia. Its domestic mines are numerous, including the huge Julong Copper Mine in Tibet.
It also aims to become a green, high-tech, leading global mining company by 2030; predicting a peak in its CO2 emissions by 2029 while continuously expanding its business. It says the latest revisions are strategically significant for speeding up Zijin’s development into a leading global metal miner. Its overarching principle of “improving quality, controlling costs, and boosting profitability” is emphasised again. In addition, boosting global competitiveness, improving global operation and management, and driving ESG performance for sustainable growth remain high on the agenda. The company says it will “continue maximising value for society, investors, and stakeholders with a steadfast commitment to boosting the growth of the global industry and the prosperity of humanity.”
The first revision concerns the annual production guidance of main mineral products, which has increased because the company plans to ramp up production in existing mines. The new guidance is as follows:
Mined copper: 950,000 t in 2023 and 1.17 Mt in 2030; Mined gold: 72 t in 2023 (nearly 2.6 Moz) and 90 t in 2025; Mined zinc/lead: 450,000 t in 2023 and 480,000 t in 2025; Mined silver: 390 t in 2023 and 450 t in 2025; Lithium carbonate: 3,000 t in 2023 and 120,000 t in 2025; Mined molybdenum: 6,000 t in 2023 and 16,000 t in 2025. Additionally, the latest revisions enriched the statement of the company’s development principles. In addition to mining, the company now emphasises expanding into renewables and advanced materials, remaining ready for domestic and international market changes, and “addressing the mismatch between its growing global footprint and the Chinese mindsets and management approaches it relies on.”
The company says it has been addressing the mismatch issue by building an advanced, Zijin-specific global operation and management model and establishing a globally competitive workforce. According to the latest plan, the two tasks will be largely completed in 2025, accompanied by key financial and ESG metrics improvements. “Such an achievement will bring the company close to its leading international peers in metal mining. Looking further to the future, the company aspires to become a green, high-tech, leading global mining company by 2030 and a green, high-tech, top global mining company by 2040.”
Three strategies were listed to meet these aspirations. The first strategy is “going global, expanding projects, and securitising assets,” meaning investing more in mines in China and its neighbouring countries and securing more significant M&A deals.
The second strategy is “focusing on mining, prioritising mineral resources, and balancing growth across business segments.” The company will focus on developing strategic mineral resources such as copper, gold, lithium, and essential renewable energy minerals. Meanwhile, it will look for ultra-large mines with significant influence.
The third strategy is “pursuing development for all, seeking green and low-carbon growth, and improving ESG performance.” Committed to supplying low-carbon minerals for the beautiful life of humanity, the company aspires to cut greenhouse gas emissions per unit of industrial added value by 38% from the 2020 level by 2029. It aims to establish itself as a leader in energy efficiency and carbon emission performance in China and abroad. In addition, it is committed to peaking carbon emissions and achieving carbon neutrality in some mines by 2029. In the long term, it plans to achieve carbon neutrality across the group by 2050.
What drove the revisions?Compared with the first version released at the beginning of 2021, the latest revisions define Zijin’s production guidance of mined copper and gold more precisely. The 2021 guidance was shown as two numerical ranges, whereas the new guidance comprises two specific numbers, one being as high as the upper limit of the 2021 range and the other even higher. Besides, guidance on lithium carbonate has been added. It is indicated as an output and world ranking target and reflects the expected contributions from the three newly acquired major lithium projects in Argentina, Tibet, and Hunan Province, China, respectively.
These upward revisions were partly driven by the company’s encouraging performance in the last three years. “Despite the COVID pandemic, geopolitical tensions, and complex economic and mining market changes, the company has outperformed its targets for the first phase of the 10-year development plan and become the largest miner in China with the most non-ferrous metallic mineral resources. Measured by the data of 2021, Zijin ranked No 7 in copper, No 9 in gold, and No 7 in zinc worldwide by resources as of the end of 2022. In addition, by newly acquired LCE resources, it ranked No 9 among listed lithium companies worldwide.”
The following figures provide a glimpse into Zijin’s progress in the past three years, primarily driven by the company’s three world-class copper operations. Mined copper production rose from 370,000 t to 860,000 t, equivalent to about 30% of China’s total production, ranking No 6 among listed copper companies worldwide.
Mined gold production increased from 41 t to 56 t, ranking No 9 among listed gold companies worldwide, making Zijin one of the fastest-growing gold miners in the world. As a result, the company ranked No 325 on Forbes’ Global 2000 list of public companies, No 7 among the metal miners, and No 1 among global miners in 2022.
In 2022, Zijin’s revenue was estimated to be RMB270 billion (almost $40 billion), and the net profit attributable to shareholders of the parent company was estimated to exceed RMB20 billion for the first time. It was based on these performance results and a deep analysis of the trends in and outside China that the company released the Three-Year Plan and 2030 Development Goals.
Besides the positive growth momentum, the Three-Year Plan and 2030 Development Goals draws attention to the challenges lying ahead: the lack of a management model suited to global expansion, carbon peak and neutrality goals, rising costs, dwindling contributions from large projects, shortcomings in the workforce’s global competitiveness, and operational and investment risks overseas.
Given these challenges, the company emphasises improving quality, controlling costs, and boosting profitability as an overarching principle. In addition, it prioritises “breaking the confines of Chinese mindsets and management approaches to enable global expansion. Furthermore, it highlights the importance of improving global competitiveness, promoting a global operational and management model, and delivering excellent ESG performance and sustainable growth.”
As specified in the Three-Year Plan and 2030 Development Goals, these aspirations require the company to adopt the following measures.
First, it will continue going global via the Zijin-specific path. This involves developing a green, low-carbon, high-quality, and sustainable growth model while continuously expanding the business. It also requires cost control, management improvement, and developing self-driven innovation to sharpen comparative advantage in the global mining market.
Second, the company will increase production and expand its resource base. Incremental projects will ramp up production, and existing projects will work towards steady-state production or even higher outputs. Meanwhile, the company will increase exploration in the world’s critical metallogenic belts and acquire significant resources in China and the neighboring countries.
Furthermore, the company will train existing staff and recruit well-trained professionals to build a globally competitive workforce. Additionally, it will boost the soft power of Ziin’s corporate culture by building mutually-beneficial ties with stakeholders and pursuing value creation and development for all. Moreover, it will strengthen the respect for the red lines, supervision over international businesses, and the prevention and control of systemic risks.
XAM Price at posting:
4.5¢ Sentiment: Buy Disclosure: Held
