Sinotech International: Zijin Mining Group (02899) diversifies its global mineral layout, benefiting stock price performance.

Sinodata International released a research report stating that Zijin Mining Group (02899) has implemented a globalization strategy, operating multiple mining projects in 17 countries. The group completed the delivery of the Akim gold mine in Ghana and the acquisition of the Raygorodok gold mine in Kazakhstan this year, directly increasing gold reserves and expanding its presence in West Africa and Central Asia. In addition, the group completed the acquisition of a controlling stake in Zangge Mining (000408.SZ) this year, increasing its stake in the Julong copper mine, adding strategic potassium resources reserves, and further strengthening its copper and lithium resources reserves. Sinodata International's main points are as follows: The suspension of operations at large mines is impacting supply, and expectations of US tariffs are exacerbating shortages. Since the beginning of this year, several large mines have suspended operations, affecting global supply, and the market has lowered copper production estimates for 2025 and 2026 multiple times. At the same time, the market expects the US to impose at least a 25% tariff on refined copper by mid-2026. To deal with potential import tariffs, a large amount of copper inventory is shifting to the US, exacerbating shortages in other regions. AI, green energy, and defense driving demand, copper supply may not meet demand in the next 10 years. Copper, as an excellent conductor, is widely used in transportation, defense, and power networks. Despite uncertain economic prospects, the market still expects copper demand to grow, mainly driven by investments in AI, the transition to green energy, and defense restructuring. With the rapid development of AI globally, such as the US launching the AI "Guangdong Create Century Intelligent Equipment Group Corporation Plan" (Genesis Mission), strengthening data center construction, significantly boosting copper demand. Mainland China has for the first time set specific targets for reducing greenhouse gas emissions, and expects demand for copper to be supported by upgrades to power infrastructure and grids. In Europe, Germany is increasing its budget spending and military spending, which will also drive demand. The International Energy Agency (IEA) predicts that based on current mining plans, existing and planned mining capacity will only meet about 70% of global copper demand by 2035. Metal resource prices and volumes are rising together, with profit growth in the first three quarters exceeding expectations. Zijin Mining Group set a 5-year plan earlier than 2024, aiming to increase mineral copper production by over 49% from 2023 to 150-160,000 tons by 2028 and gold production by over 47% to 100-110 tons. Through acquisitions, technical improvements, capacity expansion, and operational optimizations, the group's mineral gold production in the first three quarters of this year increased by 20% to 65 tons annually, and copper production increased by 5% to 830,000 tons. With rising gold and copper prices during the period, the group benefited from the "rise in volume and price." In the first three quarters, the group's operating income increased by 10% annually to 254.2 billion RMB, and net profit attributable to shareholders increased by 55% to 37.86 billion RMB, surpassing market expectations. During the period, the group's net cash flow from operating activities increased by 44% to 52.11 billion RMB, demonstrating its strong ability to create value. If metal prices continue to reach new highs, there is room for upward revision of profit forecasts for 2026. According to Bloomberg's comprehensive forecast, the group's earnings per share in 2026 are expected to grow by about 28% annually to 2.475 RMB, which is equivalent to a price-to-earnings ratio of about 12 times the forecast for 2026. If the imbalance between supply and demand in the copper market exacerbates further, and global gold demand continues to rise, driving copper and gold prices to new highs again, there is room for upward revision of profit forecasts for 2026, which would benefit the stock price performance.