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Five Major Chinese Copper Enterprises Form A Pattern Of 1 Super + 4 Strong

Five major Chinese copper enterprises made amazing performance in 2018. MMG took the lead relying on its super strengths in annual yield of 466000 tons of copper ore. Four strong enterprises, CHALCO, Zijin Mining, China Molybdenum and Jiangxi Copper, relying on annual yield of 200000 ~ 250000, form the second echelon of Chinese copper enterprises.

Boasting the flagship project, Las Bambas Copper Mine in Peru (annual copper yield as high as 385000 tons that helps it retain top 10 position globally), and contributions from stable performance of Kinsevere Copper Mine in Democratic Republic of the Congo, MMG reached full-coverage copper yield of 466000 tons, retaining its top 1 position in China and even Asia. What’s worth mentioning is that MMG completed the delivery of Laos Sepon Copper Mine in the end of 2018, selling copper capacity of 80000 tons. If this part is considered, MMG annual copper capacity exceeded 500000 tons.

The copper capacity of CHALCO Peru Toromocho Copper Mine climbed to 200000 tons, and plus the capacity of 50000 tons of Yunnan Metallurgical Group that was acquired by CHALCO, full-coverage copper capacity of CHALCO achieved 250000 tons, ranking 17th globally.

Zijin Mining has not yet released annual production data. According to issued data of Q3, it is estimated that its full-coverage copper capacity is 243000 tons, ranking 21st globally. China Molybdenum owns two copper mines. One is Tenke Copper-Cobalt Mine in Democratic Republic of the Congo whose annual copper yield in 2018 was 168000 tons. China Molybdenum owns 80% of its equity; the other is Northparks copper mine in Australia whose annual copper capacity is 50000 tons. China Molybdenum owns 80% of its equity. Considering the above two, annual copper yield of China Molybdenum achieved 219000 tons, ranking 23rd globally.

In-production copper mines of Jiangxi Copper are all domestic. Based on semi-annual report on copper yield, 101800 tons, it is deduced that annual copper yield was going to be 200000 tons, ranking 24th globally. New capacity for production in the future is rather limited and pattern evolution of copper enterprises will mainly be determined by merging and reorganization.

In the coming two years, there are few copper mine projects above designated size around the world. Judging from the projects under construction / under extension (including resumption) of the aforesaid copper enterprises, projects with incremental scale of more than 50000 tons before 2021 are as follows: Cobre Panam from First Quantum Minerals, Grasberg Block Cave from Freeport McMoRan, Chuquicamata underground from CODELCO, Toquepala and El Pilar from Grupo Mexico, Duobaoshan Phase Two from Zijin Mining, Xietongmen Project co-owned by Jinchuan and Zijin. Among all these projects, there are only 4 projects that can achieve capacity of at least 100000 tons by 2020.

Due to the fact that few new mines enter markets so in the coming 1-2 years, merging and reorganization has become a predominant role. Events like collaboration of Barrick or Newmont will definitely initiate reshuffling across industry. Significant factors are: if Freeport-McMoRan and First Quantum Minerals will be merged by other industrial giants such as Glencore and Rio Tinto, if Vale and Barrick will sell their copper assets, and if five major Chinese copper enterprises will initiate big merger and acquisition.

Furthermore, since 2021, under-construction and under-extension copper projects in global market will enter into the period to attain planned annual output. By that time, industrial competition pattern will be gradually changed and market supply and demand will get more stressful.