Zijin Mining not optimistic on gold and copper prices
Source: www.chinamining.org Citation: scmp.com Date: August 18, 2014
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| Zijin seeks to boost efficiency downstream and pursue acquisitions amid falling gold prices. |
Zijin Mining, China`s largest gold processor, will counter falling gold and base metal prices by boosting output, improving efficiency in downstream operations and seeking opportunistic acquisitions.
The president of the Fujian-based miner, Wang Jianhua, said on Monday that he was not optimistic that non-ferrous metal prices would see any significant increase in the second half of the year, given relatively weak global demand.
"With this in mind, we will focus our effort in the second half on technological and internal management improvement, as well as developing new large-scale projects," he said.
The company`s Zijinshan mine, which accounted for 32 per cent of output from its own mines, saw output fall 4.2 per cent year on year in the first half. Compared with output in the first half of 2012, it was down 38 per cent because the metal content of the mine is fast declining as easy-to-mine resources are depleting, although a layer of copper ore lies beneath the gold belt.
"In the next few years, Zijinshan will undergo a transitory period towards copper mining, but the profitability of copper does not necessarily have to be less than that of gold," Wang said. "The key is a good understanding of the resources."
On Sunday night, Zijin posted a 1 per cent year-on-year rise in first-half net profit to 1.1 billion yuan (HK$1.4 billion).
Excluding investment income, asset impairments and gains and losses on the value of its assets, underlying pre-tax profit dropped 22.9 per cent to 1.79 billion yuan.
Gold contributed 38.4 per cent of Zijin`s operating profit in the first half, down from 55.8 per cent last year, while copper contributed 39.4 per cent, up from 32.9 per cent. The contribution of iron ore, zinc and other metals also rose.
Gold processing turned in a profit of 13.5 million yuan, compared with a loss of 261 million yuan last year, while the loss on copper refining narrowed to 78.8 million yuan from 278 million yuan.
Zijin has not changed its 34-tonne full-year gold output target for its own mines, which was set early this year, or the 140,000-tonne target for copper output.
First-half gold output grew 6 per cent year on year to 15.6 tonnes and that of copper rose 14 per cent to 70,436 tonnes.
The average selling price of gold from its own mines fell 14.7 per cent in the first half, while unit production cost grew 2.3 per cent due to the declining gold content of ore from Zijinshan.
The average selling price of copper from its own mines dropped 12.6 per cent, while unit production cost declined 5.2 per cent.
Wang said Zijin would seek to acquire exploration rights and mining projects with good potential and manageable geopolitical risks. It spent 1.3 billion yuan on acquisitions in the first half of the year.
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