Morgan Stanley: Tibet copper mine expected to be a key growth driver for Zijin Mining Group (02899), target price HK$61

Morgan Stanley released a research report stating that Zijin Mining Group's (02899, 601899.SH) Julong copper mine in Tibet remains a key driver of the company's growth. The bank currently assigns a target price of HK$61 and an "Overweight" rating. With the Phase II project gradually ramping up production, copper output is expected to reach 300,000 to 310,000 tonnes this year, rising further to 310,000 to 320,000 tonnes next year. On the cost side, costs rose 13% year-on-year in the first half of this year, reflecting the shift from outsourcing to self-operation, including increased spending on equipment, vehicles, and labor, part of which is one-off. The bank expects costs to improve starting next year, as the Phase II expansion progresses, the mine adopts electric trucks and enhances automation, and the number of drivers and transportation costs are expected to decline. In addition, the Tibetan government is discussing raising the mineral resource tax rate, but even under a worst-case estimate, the impact on the company's costs would be only about RMB 1 billion to 1.5 billion. Overall, management guides the Group's copper output for this year at 1.09 million to 1.2 million tonnes. The Julong and Xianglong projects will support growth next year, while Xiongcun is expected to contribute starting in 2028; Serbia provides longer-term upside. Management also expects copper's contribution to the Group to increase over time.