With annual revenue exceeding 300 billion yuan and planned annual cash dividends of more than 10 billion yuan, mining leader Zijin Mining (601899.SH) has "handed in its paper" for 2024 performance.

Recently, Zijin Mining released its 2024 annual report. Driven by record-high production and profits of major minerals such as copper and gold, its performance hit a new high. During the reporting period, the company achieved operating income of 303.64 billion yuan, a year-on-year increase of 3.49%, and realized a net profit attributable to the parent of 32.05 billion yuan, a year-on-year increase of 51.76%. The company plans to pay a cash dividend of 2.8 yuan per 10 shares, with a total dividend of 7.441 billion yuan. Together with the 2024 semi-annual cash dividend of 2.658 billion yuan, the total dividend for the whole year will reach 10.1 billion yuan. As of the end of 2024, Zijin Mining's cash reserves also reached a historical high of 31.69 billion yuan.

It is worth noting that under the high base of performance, Zijin Mining's revenue growth rate is significantly lower than its profit growth rate, and the year-on-year growth rate of operating income in 2024 hit a new low since 2014. However, institutions are optimistic about the company's performance this year, and expect revenue growth to be about 18%, which means that it will return to double-digit growth after two years.

This year, against the backdrop of rising prices of various metals, Chen Jinghe, chairman of Zijin Mining, proposed in the 2024 annual report that the company should be mentally prepared to "overwinter". Because changes in China's demand have a significant impact on the global mineral supply and demand pattern, competition and "involution" in various industries have intensified, and it is difficult for the mining industry to "stand out alone". From the overall trend, in the context of lithium mine production capacity not yet increasing and zinc supply and demand contradictions, the price trend of copper and gold in 2025 is the key to determining Zijin Mining's performance. So far this year, gold prices have repeatedly hit new highs, and copper prices have remained high.

Copper and gold volumes and prices increased, driving performance to new highs

Copper, gold, zinc and silver are the four major mineral products of Zijin Mining. During the reporting period, the company's copper, gold and silver production increased year-on-year, and the "increase in both quantity and price" of the two main products, copper and gold, pushed revenue and net profit to new highs.

Among them, gold production ranked first in year-on-year growth, reaching 8%, with an output of 73 tons; copper production was 1.07 million tons, a year-on-year increase of 6%; silver production was 436 tons, a year-on-year increase of 6%; zinc (lead) production was 450,000 tons, a year-on-year decrease of 3%.

Looking at copper specifically, in 2024, Zijin Mining's mine copper production accounted for 65% of China's total, and copper business sales revenue accounted for 27.98% of its revenue. When copper prices fluctuated at a high level that year, its gross profit margin was the highest among the four products at 45.03%. Mines such as Kamoa Copper in the Democratic Republic of the Congo, Zijin Mining in Serbia, and Julong Copper in Tibet contributed the main output.

In 2024, driven by multiple factors such as the escalation of geopolitical conflicts, the Federal Reserve's launch of a rate cut cycle, and the central bank's continued gold purchases, gold prices have risen strongly and become one of the world's best performing assets. Zijin Mining's record performance also benefited from the performance of gold prices.

In 2024, China's mines produced 298.4 tons of gold, of which Zijin Mining's output accounted for 24%, reaching 73 tons. The company's gold business sales revenue accounted for 49.64% of its operating income, an increase of 7.55 percentage points from 42.09% in the same period last year, and the gross profit margin of the gold business was 30.07%, an increase of 4.72 percentage points year-on-year. South America is the region with the fastest growth in gold production for Zijin Mining. Since 2020, the company has successively acquired and put into production world-class gold mines such as the Buritica Gold Mine in Colombia and the Rossbell Gold Mine in Suriname, producing 21.6 tons of gold annually during the reporting period.

In addition, Zijin Mining's zinc output last year was 407,000 tons, a year-on-year decrease of 3.5%, accounting for 3.82% of operating income, and the gross profit margin was 4.6%. This was mainly due to the contradiction in zinc ore supply pushing up zinc prices against the trend, and the cliff-like drop in import processing fees caused the profits of the smelting industry to fall to a historical low.

Resource reserves determine the upper limit of mining companies' performance growth. By the end of 2024, Zijin Mining's total resources will include more than 110 million tons of copper, 4,000 tons of gold, 18 million tons of equivalent lithium carbonate, 32,000 tons of silver, 5 million tons of molybdenum, and 13 million tons of zinc (lead). Among them, copper, lithium, silver, and molybdenum are key metals for energy transformation, and gold has a strong safe-haven attribute.

Zijin Mining gave the production guidance of its four main products in 2025 in its annual report, which is 1.15 million tons of copper, 85 tons of gold, 440,000 tons of zinc and 450 tons of silver. That is, except for zinc, the production of the other three products will maintain growth. The company said that in terms of copper mines, the third phase of Kamoa Copper Mine was completed and put into production six months ahead of schedule, and the supporting 500,000-ton copper smelter will be completed in the second quarter of 2025; Xinjiang Sava Yardon Gold Mine was completed and put into production ahead of schedule, and Rossbell, Continental Gold, Norton Gold Fields, Guizhou Zijin, Shanxi Zijin and other companies continued to carry out technical transformation and expansion, and gold production capacity continued to increase.

In 2024, Zijin Mining maintained its pace of acquisitions of mines around the world in the past 10 years. Overseas, Zijin Mining completed the acquisition of Peru's Arena Copper and Gold Mine and invested in Wan Guo Gold last year, adding 230 tons of equity resource reserves of gold and 2.78 million tons of copper. It is promoting the delivery of the large-scale Akyem gold mine project in Ghana, which will increase the gold resource volume by 89 tons and an additional 83 tons of underground resource reserves after delivery. At the same time, the company leveraged the joint efforts of a number of listed companies such as Longjing Environmental Protection (600388.SH) that it controls (participates in) shares.

Lithium is the main direction of Zijin Mining's mine purchases in the past two years. At the beginning of this year, Zijin Mining announced that it planned to acquire the controlling rights of Zangge Mining, which has three major business sectors: potassium, lithium and copper. Its core assets include 30.78% equity interest in the Julong Copper Mine in Tibet, 100% equity interest in the mining rights of 724.35 square kilometers east of the railway of the Qarhan Salt Lake in Qinghai, and the potash project in the Pak-Neu mining area in Vientiane, Laos. The transaction price is expected to exceed 10 billion yuan. If the transaction is completed, Zijin Mining will achieve absolute control of the Julong Copper Mine and increase its copper and lithium resource reserves.

At present, Zijin Mining's lithium ore mainly comes from "two lakes and two mines". The "two lakes" are the overseas 3Q salt lake lithium mine in Argentina and the domestic Lagocuo salt lake lithium mine. The "two mines" are the northeastern project of the Manono lithium mine in the Democratic Republic of the Congo and the Xiangyuan hard rock lithium mine in China. Zijin Mining will not produce lithium in 2024. The company plans to form a lithium carbonate equivalent production capacity of 40,000 tons in 2025 according to market conditions, and the planned lithium production will be 250,000 to 300,000 tons by 2028.

Mainland-Hong Kong Stock Connect and funds significantly reduced their holdings and left the market

Chen Jinghe, chairman of Zijin Mining, said in the annual report that the overall world economic situation is not optimistic, and uncertainties have increased significantly. China is gradually entering the post-industrial period, and changes in China's demand have a significant impact on the global mineral supply and demand pattern. "With the intensification of competition and internal circulation in all walks of life, it is difficult for the mining industry to stand out alone. We must be mentally prepared to survive the winter."

The past decade has been a decade of both internal and external development for Zijin Mining. The company's annual revenue has increased from about 50 billion yuan to 300 billion yuan, and the expansion has continued. As the performance base becomes larger and larger, the lack of growth has gradually become apparent. From 2017 to 2022, Zijin Mining achieved double-digit growth in revenue and net profit attributable to shareholders for six consecutive years. In 2023, the growth rate of these two indicators dropped to single digits. In 2024, the company's revenue increased by 3.49% year-on-year, the lowest level since 2014, and the net profit growth rate exceeded 50% thanks to the price increase of copper and gold products.

In the fourth quarter of last year, Zijin Mining achieved revenue of 73.243 billion yuan, a year-on-year increase of 7.09% and a month-on-month decrease of 8.42%, and achieved a net profit attributable to shareholders of 7.69 billion yuan, a year-on-year increase of 55.28% and a month-on-month decrease of 17.04%, which was the largest month-on-month decline in net profit in a single quarter since the fourth quarter of 2022.

Volume and cost are the lifeline of mining companies. During the reporting period, Zijin Mining's gold and copper sales costs declined to varying degrees. Regarding the price trend of copper and gold in 2025, the mainstream view of institutional research reports is that prices will continue to rise. So far, more than 20 institutions have predicted Zijin Mining's performance in 2025, with average revenue and net profit of 360.533 billion yuan and 38.348 billion yuan, respectively, with year-on-year growth rates of 18.74% and 19.65%, respectively.

In the fourth quarter of last year, Zijin Mining's share price hit a record high of 19.87 yuan, and many institutional investors chose to cash in their profits. As of the end of the reporting period, 782 funds held 2.506 billion shares of Zijin Mining, with the number of holders and the number of shares decreasing by 259 and 864 million shares respectively from the previous month. Among them, Huaxia SSE 50 ETF, Huatai-PineBridge CSI 300 ETF, and E Fund CSI 300 ETF reduced their holdings by 23.1311 million shares, 31.5196 million shares, and 13.3555 million shares respectively.

Gaoyi Asset continues to be bullish on Zijin Mining. In the fourth quarter of last year, Gaoyi Xiaofeng No. 2 Letter Fund and Foreign Trade Trust-Gaoyi Xiaofeng Hongyuan Collective Fund Trust Plan increased their holdings by 3.324 million shares and 3.891 million shares respectively, becoming the eighth and tenth largest shareholders.

Some foreign investors have different views on Zijin Mining. In the fourth quarter of last year, the Mainland-Hong Kong Stock Connect reduced its holdings of the company by 315 million shares, the largest single-quarter reduction since the second quarter of 2022. After reducing its holdings in Zijin Mining in the third quarter of last year, the Abu Dhabi Investment Authority continued to reduce its holdings in the fourth quarter and disappeared from the top ten shareholders. After three quarters, the Swiss Union Group returned to the top ten shareholders of the company and held 181 million shares at the end of the fourth quarter of last year.

Zijin Mining's stock price has risen by 16.2% so far this year, significantly outperforming major stock indices such as the CSI 300 and the Shanghai Composite 50. As of the latest closing date (March 21), Zijin Mining's stock price was 17.57 yuan, with a total market value of 467 billion yuan.