Zijin Mining Group Co. $2899 (-1,53%) (ISIN: CNE100000502, WKN: A0M4ZR) is a listed multinational mining company headquartered in Longyan, People's Republic of China. The company is listed on both the Hong Kong Stock Exchange (H shares: 2899.HK) and the Shanghai Stock Exchange (A shares) and is one of the world's largest producers of gold, copper and zinc.
Corporate strategy and business model
Zijin Mining's business model is based on the exploration, mining, processing and distribution of a wide range of metallic mineral resources. Historically, the company was a major producer of gold and zinc, but has strategically evolved into a diversified supplier of critical industrial metals.
The core activities have traditionally focused on gold, copper and zinc/lead. In the 2022 financial year, gold production accounted for 55.8% of revenue, while copper accounted for 34.2%. However, the management's strategic focus is on a shift towards future-oriented industrial metals in order to benefit from the global energy transition and electrification.
Copper and lithium are key components for e-mobility and renewable energy infrastructure. The company is pursuing a plan that aims to achieve its 2030 production targets early, with volume growth in the copper sector at the forefront. The cash flow from the stable gold business is financing this capital cost-intensive expansion.
The Group's global reach, operating in at least 16 countries in Asia, Africa, Europe and the Americas, serves to diversify risk and access world-class deposits.
Management, affiliation and governance
Zijin Mining's management is characterized by strong founder-led expertise in the mining industry. Mr. Chen Jinghe, the founder and core leader of the company since 1993, is the Executive Director and Chairman of the Board of Directors. He is regarded as a strategic mind who has developed key technological innovations such as the "Five-Pronged Mining Engineering Model" to maximize the economic efficiency and environmental management of resources. Technical depth in leadership is a key factor in operational efficiency. The CEO is Laichang Zou, who was appointed in December 2019.
Zijin Mining is a partly state-owned company (public; partly state-owned). The largest single shareholder, Shanghang Minxi Xinghang State-Owned Property Investment Company, holds 24% of the shares and is controlled by the local government.
Although state ownership often raises governance concerns in Western markets, it represents a key strategic competitive advantage in the global mining sector, particularly with regard to international acquisitions and operations in politically volatile regions. Chairman Chen Jinghe's close political connections allow him to hold high-level meetings with heads of state (e.g. in Serbia and Tajikistan) to secure important projects and obtain permits for critical resources. This political backing can mitigate the risk of expropriation or regulatory uncertainty in complex jurisdictions and facilitate access to capital.
The company emphasizes compliance with international corporate governance standards and the separation of powers between shareholders, the Executive Board, the Supervisory Board and management.
Analysis of the moat (competitive advantages)
Zijin Mining's economic moat is robust and based on the size, quality and low cost of its mineral base. Mineral reserves are the lifeline of any mining company.
Through a strategy of independent exploration and counter-cyclical acquisition of major projects, Zijin has built one of the world's largest and fastest growing resource bases. At the end of 2024, the proven and probable reserves (Proved & Probable) for copper amounted to 50.43 million tons. Zijin thus ranks number 4 worldwide in terms of production and number 8 in terms of resources. Copper is the most important growth driver for the energy transition. Gold reserves amounted to 1,487 tons (no. 6 in production) and serve as a fundamental cash flow generator. In lithium (Lithium Carbonate Equivalent, LCE), the company has reserves of 8.60 million tons, underlining its increasingly dominant role in this critical battery minerals market.
A key element of the moat is its superior exploration capability. Over 50% of the gold and copper resources and over 90% of the zinc resources were discovered through in-house efforts. The unit costs for internally discovered resources are significantly lower than the costs incurred for acquisitions or external exploration. This results in a superior long-term return on invested capital (ROIC) compared to competitors who are more reliant on expensive mergers and acquisitions.
Management emphasizes cost leadership, which is reflected in the policy "Improve Quality, Reduce Costs, Increase Profitability". Although precise all-in sustaining costs (AISC) are lacking, the high and increasing margins indicate that Zijin is successfully controlling its cost base through operational efficiency and the use of advanced technologies (e.g. in bio-heap leaching of copper ore).
Margins and sales development
Zijin Mining's financial performance shows robust revenue growth, coupled with significant operating leverage, which has greatly improved margins.
Revenue (operating income) has increased steadily in recent years, from RMB 270.33 billion in 2022 to RMB 303.64 billion in 2024, representing a compound annual growth rate (CAGR) of 5.9%. The development of net profit shows a much stronger dynamic: this rose from RMB 24.77 billion (2022) to RMB 39.39 billion (2024), which represents a CAGR of 25.2%. Margins also improved significantly: the gross margin rose from 15.74% (2022) to 20.38% (2024), and the net margin increased from 9.16% (2022) to 12.97% (2024).
The data shows a disproportionate increase in net profit (average annual growth of 25.2% between 2022 and 2024) compared to sales growth (5.9%). This operating leverage signals a structural improvement in profitability and a more efficient cost base.
The significant jump in net margin from 9.16% (2022) to 12.97% (2024) is the strongest indicator that the world-class projects (such as Kamoa-Kakula in DR Congo or Čukaru Peki in Serbia ) have gone into full production. These mines supply large quantities of high-margin ore, which reduces the development costs per unit and massively increases the Group's overall profitability. In addition, higher metal prices for gold and copper are contributing to margin expansion.
Future growth expectations
Future growth prospects are strongly volume-driven:
Copper volume: Zijin aims to increase copper production to 1.5 to 1.6 million tons by 2028. This implies an almost doubling of production compared to 2024 levels (1.07 million tons) and cements its role as a global copper champion.
Analysts see a significant acceleration in annual sales growth to an average of 23% in the coming years (compared to 13% historically). The compound annual growth rate (CAGR) is even forecast at 30% for the period 2024-2026.
Conclusion:
Is the investment worth it? - The multiplier potential
The analysis suggests that Zijin Mining Group is a worthwhile investment with significant multiplier potential based on a rare combination of structural growth and structural margin improvement.
The multiplier potential stems from several closely linked catalysts that go beyond the pure commodity cycle: Zijin is not only dramatically increasing production (volume) in critical markets such as copper and lithium, but is simultaneously benefiting from improved operational efficiency and expected rising prices for these metals. A company that can increase its volume while decreasing its cost base generates strong earnings leverage.
Multiple expansion (revaluation): With expected annual earnings growth of 30%, the current valuation is potentially too low for a company of this growth momentum. The market tends to value high-growth companies in the critical industrial metals sector higher than traditional gold producers. The strategic reorientation towards copper and lithium makes Zijin a "future miner".
The planned IPO of the international gold division (Zijin Gold International) could release a significant sum-of-the-parts value. The separate listing of gold assets, especially in a high gold price environment, can have a positive impact on the overall valuation of the group.
Analysts are already showing strong confidence, with consensus estimates showing 20 Buy ratings and no Hold or Sell ratings.
In summary, Zijin Mining Group has established a solid foundation for future growth through its unrivaled resource base, cost leadership through exploration and aggressive, policy-backed expansion strategy in the copper and lithium sectors. If management achieves the ambitious production targets and the market fully prices in the structural margin improvement, a strong multiple potential over the next five years is fundamentally justified.
