Zhongkuang Resources — Impact Analysis Under Zimbabwe's New Policies

*✅ Core premise: The company possesses a “compliance pass”

The foundation of the assessment is that Zhongkuang Resources fully complies with Zimbabwe’s new policies.

Key point of the new policy: Only companies holding both a “valid mining license” and a “locally approved beneficiation plant” are eligible to apply for export.

Company advantage: Fully owned Bikita Lithium Mine with legal mining rights and an operational compliant beneficiation plant, fully meeting export license requirements and not subject to removal.

• Phased Impact Assessment

The report quantifies the policy’s impact on the company from short, medium, and long-term perspectives.

1. Short-term impact (February-June 2026)

Key conclusion: No substantial negative impact; indirect benefits far outweigh negatives.

Shipment schedule: Only a 1-2 month approval delay due to the approval process, not a long-term export barrier. The company has already initiated the application, and as a local benchmark enterprise, it is expected to receive priority in approval.

Supply chain security: Domestic lithium salt production capacity has 2.5-3 months of raw material safety stock, fully covering the approval window, with no impact on production.

Performance impact: Annual production and shipment targets remain unaffected. The financial cost increase from shipment delays accounts for less than 1% of annual performance and can be ignored.

Indirect benefit: The ban has cleared about 30% of small and medium-sized mines, leading to a contraction in global lithium concentrate supply, directly boosting lithium prices. As a resource self-sufficient enterprise, the company will benefit fully from rising lithium prices, amplifying performance resilience.

2. Medium-term impact (H2 2026 - H1 2027)

Key conclusion: Compliance advantages become prominent, and performance certainty increases.

Industry consolidation: Higher industry thresholds provide opportunities for the company to acquire high-quality surrounding mineral rights at low cost and expand scale.

Bargaining power enhancement: Under global supply tightness, the company’s stable compliant capacity will significantly increase bargaining power and customer loyalty with downstream leading battery manufacturers and automakers.

Policy benefits: The company’s layout aligns perfectly with Zimbabwe’s “resource localization” strategy, potentially gaining more policy support in export quotas, taxes, and other areas in the future.

3. Long-term impact (after January 2027)

Key conclusion: Fully mitigate policy risks, with a continuously deepening moat.

Avoidance of bans: The company has planned a 30,000-ton/year lithium sulfate deep processing project in Zimbabwe, expected to start production in Q3 2027, which can fully avoid the upcoming “comprehensive ore export ban” and directly export high-value-added lithium sulfate.

Profitability enhancement: Local deep processing will increase product added value, benefit from transportation cost advantages and local tax incentives, further boosting profits.

Risk reduction: Deeply aligned with resource-rich countries, effectively reducing long-term geopolitical and policy change risks.

• Quantitative Performance Impact Estimation

The report uses the 2025 net profit attributable to parent company median of 850 million yuan as a baseline to forecast performance scenarios for 2026 and 2027:

Neutral scenario (60% probability): 2026 net profit forecast of 3.3-3.8 billion yuan (approximately 288%~347% YoY growth); 2027 forecast of 4.5-5.3 billion yuan.

Optimistic scenario (25% probability): 2026 net profit forecast of 4.8-5.3 billion yuan (approximately 465%~524% YoY growth); 2027 forecast of 7.0-7.8 billion yuan.

Conservative scenario (15% probability): 2026 net profit forecast of 1.9-2.3 billion yuan (approximately 124%~171% YoY growth); 2027 forecast of 2.6-3.0 billion yuan.

• Clarification of Core Concerns

The report specifically addresses three potential market concerns:

1. Regarding export eligibility: Clarifies that “local deep processing capacity” is an approval bonus rather than a strict threshold; the company meets the core conditions and has full application qualification.
2. Regarding policy tightening: Believes policies will be implemented gradually; as a benchmark enterprise, the company will receive transitional exemptions even if policies become stricter.
3. Regarding approval risks: The company has complete qualifications, and the approval process is progressing normally, with no risk of being blocked; safety stock is sufficient to cover the approval period, eliminating the need for high-cost raw material purchases.

⚠️ Core risk warnings

The report also objectively lists five potential future risks:

1. Policy implementation exceeding expectations: Zimbabwe’s policies may tighten further.
2. Project construction delays: Zimbabwe’s lithium sulfate and other projects may experience delays in commissioning.
3. Lithium price volatility: Downstream demand may fall short, causing significant drops in lithium prices.
4. Geopolitical risks: Changes in the political or policy environment of countries hosting overseas projects.
5. Industry competition risks: The global increase in capacity may lead to oversupply.