On March 22, Zijin Mining held its 2020 annual results announcement via live-streaming, at the Shanghai Stock Exchange’s roadshow center.
Chairman Chen Jinghe, President Zou Laichang, Vice President Xie Xionghui, CFO Wu Honghui, and Board Secretary Zheng Youcheng, had in-depth exchanges with investors and industry analysts worldwide, on Zijin’s strategic plans, operation and management, financial and ESG performance, construction of key projects, mergers and acquisitions, and technological innovation.
Porgera mining rights renewal: a topic of interest to many investors
Chen Jinghe noted that Zijin has authorized Barrick (Niugini) Limited to negotiate with the government. Despite clear progress made regarding the matter, there are still some uncertainties.
Essence Securities: What are the major gaps facing Zijin as it endeavors to achieve its goals? And what will be your growth areas in the five years following 2025?
Goldman Sachs: What are the company’s M&A targets? And what about your expected minimum return?
Chen Jinghe said as a latecomer to the global market, we still have a lot to do to catch up with top miners of the world. We are committed to building our global competitiveness by expanding our mineral resources base, hiring and training talent with a global vision, and building an international operation and management system.
Mineral resources are the core assets of mining businesses. We remain open to good resources across the world, and strive to achieve our goals by using innovative M&A methods, stepping up geological exploration, and improving construction efficiency. Relying on our competitive advantages in technology and project management, we will seize the opportunities provided by business cycles, and act at the right time, to achieve continued, rapid growth in mineral resources. This will provide strong support for our growth post 2025.
Citibank: What are Zijin’s strategic priorities and main tasks for the next 5 years? What substantive changes has ESG brought to Zijin’s operations?
Chen Jinghe noted Zijin will continue to pursue the strategy of global business development. Following the principle of “further reform, quantum leap, sustainable development”, Zijin will push for a transition from its home-based operation and management system to a global one.
Chen Jinghe said ESG is vital to the sustainable development of a company. The environment, the wider society and governance are complementary. There are indeed many good practices in the field of ESG from the West for us to draw upon, but China also has relevant standards, some of which are more stringent than international standards. The development of green mines is a case in point. Zijin is committed to coordinated development with our partners, our communities, the environment and safety, and we want to ensure that more people benefit from our existence.
Xie Xionghui indicated that Zijin has put in place a top-down ESG system, going down right from the Board. Sound ESG performance is an inherent requirement for our development. In 2021, Zijin will further integrate ESG into all of our activities, taking steps towards achieving carbon neutrality, and securing certification with ISO14001 and other accreditations.
An investor: How will the push for carbon neutrality affect Zijin’s future development?
Zou Laichang said Zijin takes climate change very seriously, and is creating plans on peaking carbon emissions and realizing carbon neutrality. The pursuit of carbon neutrality is great news to our copper products. In particular, it will benefit companies like Zijin, which are efficient, low in energy consumption, and strong in technological capabilities, as it will make our sectors more concentrated. In fact, last year, we set up a technology company focusing on environmental protection. We have also started businesses in new materials and new energy sources, and built solar power stations.
Haitong Securities: How will the costs and prices of gold, copper, and zinc move in 2021? Is it possible for you to produce more copper than previously estimated in 2021?
Chen Jinghe said in the post-epidemic era expectations for economic recovery are rising, and copper prices will remain high in the medium to long term. The new energy revolution will also create new, growing demand for copper. This goes to show that Zijin got it right with our strategic investments in copper in the past few years.
Wu Honghui said Zijin will continue to control costs, and keep a firm grip on recovery, ore loss and dilution rates, equipment operation rate, and productivity. In particular, we will continue to rely on our comparative advantages in technology and technological progress, which is driven by innovation. In 2021, the costs of our main products will be even lower when many of our major projects go into production.
An Investor: Could you update us on the technical upgrade projects of Serbia Zijin Copper？Will there be any synergy between the projects and the Čukaru Peki copper-gold mine? What’s the status with the construction activities at Julong Copper？
Zou Laichang said the technical upgrade activities of Serbia Zijin Copper are progressing smoothly. After completion, the projects will produce 120,000 tonnes of mined copper per annum, and smelt 180,000 tonnes of copper. Thus they will achieve significant synergy with the Čukaru Peki copper-gold mine. Construction at Julong Copper is also going very well. For phase I, 67% of its infrastructure in the copper mine area have been completed. Planned to begin producing at the end of 2021, it will produce 160,000 tonnes of copper per year after reaching full capacity. Phase II will be built to a capacity of 300,000 tonnes per day, and will produce 260,000 tonnes of copper per year.
Industrial Securities: Regarding block caving, could you update us on potential breakthroughs and your application of the method?
Chen Jinghe said block caving is an advanced technique that could enable low-cost, efficient mining at scale. Zijin is carrying out intensive research on the method. When ready for use at an industrial scale, it will play a significant role in the development of many large, deep underground mines, such as the JM porphyritic copper mine of Serbia Zijin Copper, the porphyritic lower zone of the Čukaru Peki copper mine, the porphyritic copper-molybdenum mine at Luobling, Zijinshan mountain, and the porphyritic copper mine in Tongshan, Heilongjiang Province. The block caving method produces ore at a cost comparable to that of open-pit mining, and will help boost our copper production.
The live-streamed results announcement lasted for more than an hour, with many professional investors and industry analysts from across the world joining online. The live streaming was followed by a text-based online Q&A, and a meeting with analysts.