On January 16, 2025, Zijin Mining announced it will acquire a 24.82% interest in Zangge Mining at RMB 35 per share, for a total of RMB 13.729 billion. The acquisition, to be made through its wholly-owned subsidiary, Zijin International Holdings, will bring Zijin’s total stake in Zangge to 25%. Combined with corporate governance arrangements, this will allow Zijin to secure control of Zangge and consolidate its financial statements.
In recent years, Zijin Mining, a major global metals miner, has been bolstering its China portfolio of strategic minerals. Zangge holds high-quality copper, lithium, and potash assets in Xizang and Qinghai. Through this transaction, Zijin will substantially increase its reserves of copper and lithium and further expand its presence in the capital market. It will also add potash, a strategic mineral, to Zijins’ business and give it absolute control over the Julong Copper Mine.
First-Ever Control Over an A-Share Listed Mining Company
The acquisition marks Zijin’s single largest investment deal to date. It is the first time that Zijin has obtained a controlling interest in an A-share listed miner and the second time that it has gained control over an A-share listed firm, following its acquisition of Fujian Longking.
The proposed acquisition aligns with the China Securities Regulatory Commission’s policies encouraging leading listed companies to focus on their core businesses and pursue mergers and acquisitions of peer companies they previously had no control over. It will also facilitate the integration of quality resources and make both Zijin and Zangge more investment-worthy.
Zangge, a company listed on the Shenzhen Stock Exchange, operates mainly in Xizang and Qinghai. Through years of mergers and acquisitions, it has developed three business segments: potash, lithium, and copper. Its core assets include a mining license covering 724.35 square kilometers to the east of the Qinghai Qarhan Salar Railway; 70% stakes in two potash projects situated in Pakngum and Xaythany counties in Vientiane, Laos; and significant stakes in assets in Xizang – 24.01% in the Mami Tso Salar, 21.09% in the Longmu Tso Salar and Kyetse Tsakha Salar, and 30.78% in the Julong Copper Mine.
On January 9, Zangge announced that its controlling shareholder Zangge Venture Capital and second-largest shareholder Xingsha Hongyun are planning a share transfer to Zijin Mining. On January 16, Zijin International Holdings signed an agreement with the two shareholders to acquire a controlling interest in Zangge. Upon completion of the transaction, Zijin will have more than 50% of the vote on Zangge’s board of directors, enabling it to gain control of the company and consolidate its financial statements.
In recent years, while remaining committed to operating globally, Zijin has stepped up investments in assets across China and its neighboring regions, with Xizang as a key investment destination within China. Apart from owning significant stakes in the Julong Copper Mine, Zijin is the second-largest shareholder in the Yulong Copper Mine and is the operator of the Zhuno and Xiongcun copper mines, as well as the Lakkor Tso Salar, all located in Xizang. Once completed, the latest acquisition will further boost Zijin’s Xizang business.
Absolute Control Over the World-Class Julong Copper Mine
The cooperation between Zijin and Zangge began with the Julong Copper Mine. Successful development of the project created a win-win outcome and set the stage for deeper collaboration. Julong is the largest world-class copper mine in China. When it was the majority owner of the mine, Zangge ran into an impasse in developing the project despite having made hefty investments. In June 2020, Zijin took a controlling stake in the mine and became its operator, putting Julong’s Phase I into production in only 18 months and setting a benchmark for mining at high altitudes. The mine produced 115,000 tonnes, 154,000 tonnes, and 166,000 tonnes of copper in 2022, 2023, and 2024, respectively.
Though Zangge became Julong’s second-largest shareholder, it benefited significantly from Julong’s success. The project contributed the majority of Zangge’s profits, providing stability amid a slowdown in the industry. It generated investment returns of RMB 720 million in 2022, RMB 1.3 billion in 2023, and an estimated RMB 1.36 billion in the first three quarters of 2024.
In 2024, Julong added another 14.726 million tonnes of copper resources, bringing its total to 25.88 million tonnes at an average grade of 0.29% and positioning it as the copper mine with the most resources in China. Its Phase II, currently under construction with a daily processing capacity of 200,000 tonnes, is scheduled for commissioning by late 2025. This expansion will increase Julong’s total copper output to between 300,000 and 350,000 tonnes per annum. Phase III expansion is also in the pipeline, with studies underway, potentially pushing total production to 600,000 tonnes per annum and establishing Julong as a leading copper mine in the world. Control of Zangge will give Zijin absolute control over Julong, enhance its operational efficiency, and accelerate the development of its second and third phases.
Ambitious targets have been set in Zijin’s new five-year plan released in 2023: producing 1.5 to 1.6 million tonnes of copper, 100 to 110 tonnes of gold, and 250,000 to 300,000 tonnes of lithium carbonate equivalent(LCE) by 2028. With its existing resource base and production capacity, Zijin is well-positioned to achieve these goals.
Enhancing Synergy in the Lithium Segment
Leveraging lithium resources from the Qarhan Salar, Zangge has developed an annual production capacity of 10,000 tonnes of battery-grade lithium carbonate. Its incremental lithium output will come from three salars in Xizang: Mami Tso, with a planned output of 100,000 tonnes per annum; Longmu Tso, 70,000 tonnes per annum; and Kyetse Tsakha, 60,000 tonnes per annum. These salars hold vast untapped lithium resources, with 2.18 million tonnes of LCE, 1.89 million tonnes, and 2.01 million tonnes, respectively. Mami Tso, currently under construction and adjacent to Zijin’s Lakkor Tso Salar, boasts extremely high lithium concentrations. By leveraging its low-cost advantage, it is expected to deliver strong returns.
Zangge has a capable management team, rich salar development experience and low-cost lithium extraction techniques. Through continued innovation, it addressed world-class problems in lithium extraction from brine with ultra-high magnesium-to-lithium ratio and ultra-low concentrations, achieving more than 95% lithium recovery. It also developed a world-leading, one-step extraction process to produce battery-grade lithium carbonate.
Zijin has a world-class lithium resource base—two salars and two hard-rock mines—and aims to produce 250,000 to 300,000 tonnes of lithium carbonate equivalent by 2028. Combined with the long-term output from Zangge, this will likely position Zijin among the world’s leading lithium producers. The company will leverage Zangge’s expertise in salar development and low-cost lithium extraction processes to unlock synergy among their lithium brine projects in Xizang.
As pledged in the announcement, Zijin will address any post-acquisition competition in the lithium business or other potential situations involving peer competition by taking various measures and prudently integrating relevant business operations within 60 months of gaining control of Zangge. It will also prioritize Zangge for opportunities in lithium and potash businesses.
Additionally, this acquisition will add potash, a strategic mineral, to Zijin’s portfolio. As a country with a large agricultural sector, China has the world’s highest potash demand. Similar to many other minerals, more than 50% of its potash consumption comes from imports. Initially a potash miner, Zangge is now China’s second-largest potassium chloride producer, with over 1 billion tonnes of potassium chloride resources and an annual production capacity of around 1.1 million tonnes. Zangge’s future potash growth lies in its projects in Laos, which have a planned annual output of 2 million tonnes.
Zangge has rich, quality resources. Zijin’s technical expertise across the mining value chain, research and execution capabilities for large projects, as well as the two companies’ industry-leading cost advantages, will accelerate the extraction of Zangge’s potash and lithium resources, transforming deposits into economic benefits.
This acquisition will bring another high-quality listed company into Zijin’s portfolio, further expanding its presence in the capital market. Thanks to Zangge’s low debt-to-asset ratio, Zijin’s consolidated financial statements will show a further decrease in the ratio after the acquisition is completed.
Translator: Li Yuanxing Reviser: Jian Editor-in-Chief: Wang Jie