Zijin Mining’s third-quarter profit falls quarter on quarter as copper and gold output weakens and unit costs rise
Zijin Mining’s third-quarter net profit rose 26% year on year but fell 4% quarter on quarter, missing Bank of America’s expectations. Mined copper and gold output and costs weighed on the mining gross margin, while the lithium business increased production and reduced costs as projects ramped up.
Original source：BofA Global ResearchFirst published on Unhidea：Original source date：
Key takeaway
Weak copper and gold output and rising costs pushed Zijin Mining’s third-quarter earnings below Bank of America’s expectations. Full-year copper and gold targets face downside risks, but the bank remains positive on the copper price outlook and prospects for increased project output.
Why did third-quarter profit fall short of Bank of America’s expectations?
Zijin Mining’s net profit for the first three quarters of 2026 was 57.5 billion yuan, up 52% year on year. On that basis, third-quarter net profit was 18.4 billion yuan, up 26% year on year and down 4% quarter on quarter, below Bank of America’s expectations.
The overall gross margin rose by more than 0.7 percentage points quarter on quarter to 39.9%, but the mining gross margin fell by 1.3 percentage points to 66.5%. Gains from higher copper prices were partly offset by a decline in the realized gold sales price and higher unit costs for gold and copper.
What changed in copper and gold output and costs?
Third-quarter mined copper output was 281 thousand tonnes, up 6.9% year on year and 2.2% quarter on quarter, but below Bank of America’s expectations. The bank attributed this mainly to continued weakness at the Kamoa-Kakula mine.
The unit cost of mined copper rose 14.4% year on year and 3.6% quarter on quarter. Bank of America said this mainly reflected declining ore grades.
Third-quarter mined gold output was 23.4 tonnes, down 1.4% year on year and up 1.0% quarter on quarter. Bank of America attributed this mainly to weaker-than-expected output at Zijin Gold International. The unit cost of mined gold rose 11.9% year on year and 2.2% quarter on quarter, partly reflecting ongoing capacity upgrades at gold mines.
How does the lithium business differ from the copper and gold businesses?
Third-quarter lithium output rose 30% quarter on quarter to 35.5 thousand tonnes, while unit costs fell 21.4% quarter on quarter to 27752 yuan per tonne. Bank of America attributed this mainly to improved operating efficiency and economies of scale from the ramp-up of lithium projects.
Copper, gold and lithium output in the first three quarters was 816 thousand tonnes, 70.1 tonnes and 79.1 thousand tonnes, respectively, representing 68%, 67% and 66% of their respective full-year targets. The company maintained its full-year production guidance. Bank of America sees downside risks to the copper and gold targets, while lithium remains on track with support from the ramp-up of the Manono project.
Why does Bank of America maintain its buy rating?
Bank of America maintained its buy ratings on Zijin Mining’s A-shares and H-shares, citing its positive copper price outlook, the potential for continued growth in copper and gold output, and a valuation it considers undemanding.
Higher output depends on a recovery at Kamoa-Kakula, the ramp-up of the Julong copper mine, the acquisition of Chifeng Gold, and capacity upgrades at Zijin Gold International. Slower-than-expected project ramp-ups, further production shortfalls and continued increases in unit costs would put pressure on this assessment.
Bank of America’s target price for the H-shares is 43 Hong Kong dollars, based on a discounted cash flow valuation assuming a weighted average cost of capital of 8% and a perpetual growth rate of 2%. Its A-share target price is 39 renminbi, based on an A-share premium of 7% over the H-shares.
