Financial Report 2024 | Capacity Expansion, CMOC Achieves Record High Revenue and Net Profit

The "double boost" of capacity expansion and rising copper prices has driven the performance of the mining giant.

CMOC (603993.SH) achieved revenue of 102.818 billion yuan in the first half of the year, an increase of 18.56% year-on-year; achieving a net profit attributable to the parent of 5.417 billion yuan, an increase of 670.43% year-on-year. Both revenue and net profit reached their historical best performances.

The mining business covering exploration, mining, ore dressing, and smelting contributed revenue of 31.436 billion yuan, accounting for 30.57%, and a net profit attributable to the parent of 4.743 billion yuan, accounting for 87.56%;

The trading business covering procurement, warehousing, transportation, sales, and information contributed revenue of 71.382 billion yuan, a year-on-year decrease of 3.96% to 71.382 billion yuan, contributing only 674 million yuan in net profit.

In terms of products, benefiting from the commissioning of the TFM copper-cobalt mine and KFM cobalt mine in the Congo last year, and the continuous increase in production in the first half of this year, CMOC's copper production in the first half of the year doubled year-on-year to 313,800 tons; cobalt production increased by 178% year-on-year to 54,000 tons.

Copper is the core product of CMOC, with revenue in the first half of the year increasing by 368.88% year-on-year to 20.026 billion yuan.

Cobalt, molybdenum, and tungsten contributed revenue of 4.342 billion yuan, 3.002 billion yuan, and 0.879 billion yuan, respectively. Except for a 20.29% year-on-year decline in molybdenum revenue, all recorded year-on-year growth.

TFM is one of the world's largest copper-cobalt mines, currently with 5 production lines and the capacity to produce 450,000 tons of copper annually, with cobalt as a by-product having a production capacity of 37,000 tons.

KFM is the world's largest cobalt mine. Currently, it has the capacity to produce over 150,000 tons of copper and 50,000 tons of cobalt annually.

Currently, CMOC is the world's largest cobalt producer, with copper production close to the top ten globally.

According to CMOC's 2024 annual production guidance, the annual plan is to produce 520,000 to 570,000 tons of copper and 60,000 to 70,000 tons of cobalt, with 58% and 83% of the guidance achieved by the end of the first half of the year, respectively, completing more than half.

In terms of prices, except for the average price of cathode copper, which increased by 4.45% year-on-year to $9,090.3 per ton, the average prices of other products have all experienced a slight decline, with the second largest core product cobalt price falling by 20.44% year-on-year to $12.22 per pound.

Cobalt is currently highly focused on terminal scenarios such as new energy vehicles.

As an important component of ternary lithium batteries, cobalt can improve the stability and cycle life of batteries.

However, there is currently an overcapacity situation in the new energy battery market.

In the first half of the year, some leading battery manufacturers proactively reduced production capacity. For example, LG Energy announced on June 28th the suspension of the construction of a storage battery factory in Arizona, USA; Panasonic canceled its battery factory plan in Norway; and Honeycomb Energy canceled its second factory plan in Germany.

The reduction in downstream battery production will inevitably affect the demand for upstream raw materials.

Regarding the inquiry about whether the decrease in cobalt prices will adjust production, a CMOC executive did not directly answer during the briefing, but indicated that there may be a supply-demand imbalance in the cobalt market in the short term, but it is expected to balance in the medium to long term.

The company's executive stated that CMOC has a certain bargaining power with downstream customers, with a relatively high gross profit margin, so the executive believes that cobalt products will continue to contribute positively to the company's profits On August 26, CMOC opened high and rose, closing up 2.96% at 7.64 yuan per share