Net profit surged by 62%, hitting a new all-time high—how strong and “top-quality” are Zijin Mining’s dual labels of “Mining King” and “Cash Cow”?

Zijin Mining Performance Conference. Source: Corporate Earnings Conference

Staff Reporter Zhang Bei, Huang Zhinan, Shenzhen Report

When the price turning point arrives, hitting a record high does not necessarily mean the next step is safe.

On March 23, Zijin Mining (601899.SH, 02899.HK) held its 2025 annual earnings presentation through a coordinated event in Xiamen and Hong Kong. Its chairman was absent due to reasons, while Vice Chairman and President Lin Hongfu, along with management, delivered the best performance report since its listing.

By 2025, this global mining giant, dubbed the “Mining King” by the capital market, achieved operating revenue of 349.1 billion yuan, a 15% increase year-over-year; net profit attributable to parent of 51.8 billion yuan, a significant 62% jump; and operating cash flow of 75.4 billion yuan, up 54%.

Thanks to the favorable rise in gold and copper prices, Zijin Mining completed its phased strategic goal three years ahead of the original 2028 plan. In 2025, its A/H share prices increased by 128% and 152%, respectively, with market value soaring significantly.

However, amid a recent correction in gold prices, the dual challenges of cyclical reversal and rising costs will be crucial for Zijin Mining to maintain market trust. The iron law of cycles will never make exceptions for any new record highs.

Performance Peak

This annual report is the most impressive achievement Zijin Mining has delivered since its founding.

The 2025 financial report shows Zijin Mining achieved an EBITDA of 101.4 billion yuan, total profit of 80.8 billion yuan, and net profit of 63.82 billion yuan, a 62% increase from 39.39 billion yuan in 2024; after deducting non-recurring items, net profit attributable to parent was 50.7 billion yuan, maintaining a high growth rate of over 60%.

An experienced senior analyst in the mining industry from foreign institutions told “Huaxia Times”: “The reason the market calls Zijin Mining a ‘cash cow’ is because of its cash flow generation capacity, which has far exceeded the industry average over the past year. This is fully confirmed in the annual report data.”

In 2025, Zijin Mining’s net cash flow from operating activities reached 75.43 billion yuan, a 54.38% increase from 48.86 billion yuan in 2024; net increase in cash and cash equivalents was 31.57 billion yuan, a 164% surge from 11.96 billion yuan in 2024, with cash flow growth significantly outperforming industry averages.

As of the end of 2025, its cash balance reached 65.58 billion yuan, doubling from 31.69 billion yuan at the end of 2024. Excluding restricted funds, the cash and cash equivalents available for payment totaled 61.22 billion yuan. This ample liquidity not only solidifies the company’s operational foundation but also underpins its “cash cow” label, providing ammunition for acquisitions like Cangge Mining and overseas gold mines.

According to the reporter’s observations, the asset-liability structure of Zijin Mining during this period was consistent with its performance trend, showing signs of recovery. By the end of 2025, total assets reached 512.01B yuan, up 29.1% from 396.61B yuan at the end of 2024; meanwhile, the asset-liability ratio decreased from 55.19% in 2024 to 51.56%, a drop of 3.63 percentage points, achieving a steady decline in leverage amid rapid scale expansion.

In the analyst’s view, the scale of Zijin Mining’s current assets, including cash and trading financial assets, increased, while the growth rate of current liabilities lagged behind, leading to a significant improvement in the current ratio and enhanced short-term debt repayment capacity.

Profit structure-wise, the two core businesses of gold and copper form the absolute profit pillars. In 2025, its gold business contributed over 40% gross profit, copper contributed 34.5%, and 58% of net profit came from overseas operations.

In terms of production, Zijin Mining produced 90 tons of mineral gold in 2025, a 23% increase year-over-year, with a compound annual growth rate of 17% over the past five years—outpacing the global gold mining industry’s average growth rate; mineral copper output reached 1.09 million tons, making it Asia’s only mining company with over one million tons of mineral copper for three consecutive years. Even with reduced output from its joint venture Camoa Copper, it still achieved positive growth.

Details of inventory changes reflect Zijin Mining’s control over the current cycle rhythm. In 2025, the increase in inventories tied up 4.11 billion yuan in cash flow, significantly narrower than 5.30 billion yuan in 2024.

The core reason for this change is Zijin Mining’s optimistic outlook on gold and copper prices in 2025. The company largely did not hedge its products, and with prices remaining high throughout the year, it optimized production and sales rhythm, accelerated inventory turnover, reduced capital occupation, and significantly improved the match between production and sales.

From the impairment data, in 2025, asset impairment provisions and credit impairment losses totaled 427 million yuan, down 43.24% from 753 million yuan in 2024, significantly reducing inventory write-down risks at high prices.

However, behind these stellar results lie some concerns, primarily rising costs.

Wu Honghui, Executive Director, Vice President, and CFO of Zijin Mining, admitted at the earnings conference that in 2025, the unit costs of gold and copper products increased, mainly due to four factors. Among them, the grade of main mines generally declined, with only four mines seeing an increase; the Zijin project in Serbia experienced a significant grade decline, impacting overall gold and copper costs most. “Mining depth continued to increase, open-pit stripping ratios rose, raising transportation and mining costs; additionally, the production of main mines with higher unit costs increased, raising overall unit costs; finally, new acquisitions during transition periods had higher costs, and rising employee wages and benefits added to costs,” Wu explained.

Although the costs of copper C1 and gold sustaining costs remain low globally, the upward trend in costs cannot be ignored.

A greater uncertainty stems from the potential impact of gold price correction on performance. The high gold prices in 2025 were a key driver of Zijin Mining’s substantial growth.

Lin Hongfu, Vice Chairman and President, stated at the conference that the company remains optimistic about the medium- and long-term gold price trend, citing global governance issues, excessive issuance of fiat currency, and increasing demand from new industrial revolutions as core reasons supporting high or even rising gold prices.

However, it is also important to note that gold prices have already experienced a phase of correction. If gold prices continue to decline in the future, it will directly compress the gross profit margin of its gold business and impact overall profitability.

Meanwhile, risks from its global expansion cannot be overlooked.

The pressure from gold price correction has already manifested since the start of 2026. As of March 23, international gold prices have experienced multiple sharp drops, with significant fluctuations in both the largest single decline and spread.

Recent international gold trends. Source: Jintou.com

Specifically, on January 30, spot gold (XAU) fell by 484.62 USD per ounce in one day, a 9.01% drop, from a high of 5,450.32 USD/oz to a low of 4,695.32 USD/oz.

In the past four trading days, spot gold has fallen from 5,005 USD/oz to a low of 4,097 USD/oz, a total decline of 908 USD, with the short-term correction far exceeding market expectations.

Additionally, the 2025 financial report shows that nearly 60% of Zijin Mining’s net profit came from overseas operations. While globalization has contributed to performance growth, it also faces risks such as intensified geopolitical struggles, resource nationalism, fragmented mining regulations, and exchange rate fluctuations.

Wu Xiaomin, the company’s independent director, pointed out at the earnings conference that the company faces three core challenges in its internationalization: external environment, industry competition, and internal operational management. The complexity of global operations and cross-cultural management are ongoing issues the company must address.

Strategy of Defense and Offense

As a leading company in a highly cyclical industry, fluctuations in non-ferrous metal prices are always the most critical variables in Zijin Mining’s operations.

The high prices of gold and copper in 2025 led to explosive growth in performance, but how to maintain profitability and balance risks and rewards amid cycle fluctuations remains a core concern for management.

Regarding price judgment and hedging strategies, Zijin Mining has established a clear layered decision-making and control system. Wu Honghui detailed that the company has set up a financial committee led by the chairman, with specialized groups such as the commodity hedging decision team and currency financial guidance team, responsible for daily supervision and emergency decisions under market volatility.

He further explained that, under the explicit authorization of the board, the company’s total hedging volume for mineral products does not exceed 5% of annual production; copper exposure at the smelting end does not exceed 25%, and gold and silver exposures do not exceed 50%. “Not speculating is an inviolable bottom line for the company.”

Thanks to accurate market trend judgment, Zijin Mining fully benefited from the cyclical upswing in 2025.

Wu Honghui also said that the company has integrated information resources from the industry, trade, smelting, and research teams domestically and abroad, continuously improving its commodity price research capabilities. “In recent years, management’s judgment of price trends has been generally correct. The company largely avoided hedging, and the exposure at the smelting end was released reasonably, allowing us to fully capitalize on the rising market for commodities and precious metals.”

This strategy is reflected in the financial data: in 2025, Zijin Mining’s fair value change gains amounted to 2.94B yuan, and investment income reached 5.98B yuan, serving as an important supplement to net profit.

Regarding inventory management and price fluctuation responses, the company has established a full-chain control system from production to sales. On the production side, it employs the “Five Rings of Ore Flow” project management approach, coordinating geology, mining, beneficiation, smelting, and environmental protection processes, promoting automation and intelligent mining to improve transportation efficiency and equipment utilization, reducing unit energy consumption and costs; leveraging technological innovation to maximize capacity and improve ore recovery rates, driving down unit costs through scale expansion, thus building a safety cushion against price fluctuations.

Wu Honghui emphasized that the company is confident in keeping future cost increases within single digits or even lower. On the sales and inventory side, it dynamically adjusts production and sales rhythm based on price trends, accelerating inventory turnover during high-price periods. In 2025, inventory growth was significantly narrower than the previous year, reducing capital occupation and the risk of inventory write-downs due to price corrections.

Meanwhile, Zijin Mining strictly controls inventory impairment testing. Under high-price conditions, asset impairment losses in 2025 decreased significantly from the previous year, maintaining inventory quality.

To hedge against exchange rate risks associated with commodity fluctuations, the company adheres to a neutral foreign exchange management principle. Wu Honghui explained that the core is to control the mismatch between the reporting currency and asset-liability currency of legal entities, balancing interest rate and exchange rate interactions.

“When exchange losses exceed the interest income from low-interest currencies, we use hedging tools or adjust the asset-liability currency structure through integrated domestic and foreign currency funds pools to maximize interest and exchange rate benefits.” The financial report shows that in 2025, foreign exchange gains and losses in financial expenses amounted to 140 million yuan, turning positive from -56 million yuan in 2024. Amid significant fluctuations in major currencies, this effectively controlled the erosion of profits by exchange rate risks.

Lin Hongfu emphasized at the conference that, in the context of historically high non-ferrous metal prices, the company will focus heavily on endogenous growth, exploring internal growth potential, with technological upgrades and capacity expansion of existing projects as priorities.

The reporter learned that Zijin Mining plans to produce approximately 105 tons of mineral gold, 1.2 million tons of mineral copper, and 120k tons of lithium carbonate in 2026; by 2028, mineral gold is expected to reach 130–140 tons, mineral copper 1.5–1.6 million tons, and lithium carbonate 270k–320k tons. Continued capacity releases are expected to further dilute unit costs and enhance resilience against cycle fluctuations.

From the 2025 financial report, Zijin Mining’s ability to seize the cycle, its global resource layout, and industry-low costs have realized the growth of a “Mining King” and the profitability of a “Cash Cow,” setting a record for best-ever performance.

However, the nature of a highly cyclical industry means there are no forever-high markets. Gold price corrections, rising costs from declining main mine grades, and geopolitical risks from overseas expansion are challenges this mining giant must face in the future.

In the super-cycle narrative of non-ferrous metals, Zijin Mining’s story has only just entered the second half.