Copper prices soar, are Chinese mining companies making a fortune?

Goldman Sachs' global commodities research team released a report on January 28, significantly raising its price forecasts for two key metals, gold and copper, which is expected to systematically drive up the profit expectations of related mining companies in China. The report pointed out that the premium for resource scarcity has become substantially evident.

According to the Wind Trading Desk, the report raised the benchmark gold price target for 2026 by 10%-16%, expecting an average price of USD 4,978 per ounce that year; at the same time, the 2026 LME copper price forecast was increased by 7% to USD 12,200 per ton. Based on these price adjustments, Goldman Sachs has correspondingly raised the profit forecasts for Chinese copper and gold companies within its coverage for 2026-2027 by 9%-33%.

The research report emphasized that leading companies with significant production growth potential will enjoy the dual benefits of price increases and capacity expansion, with some companies expected to see copper production growth of 9%-14% in 2026. From a valuation perspective, current stock price levels generally reflect relatively conservative commodity price expectations; if long-term target prices are gradually realized, the current sector valuations have a clear margin of safety and upside potential.

Structural Allocation Boosts Gold Prices, Capital Inflows Create Copper Scarcity Premium

Goldman Sachs' global team pointed out in its latest research that the commodity market is entering a phase of structural revaluation, particularly evident in the precious metals and industrial metals sectors.

For gold, the team raised its average price forecast for 2026 by 10% to USD 4,978 per ounce and significantly increased the average price forecast for the first half of 2027 by 16% to USD 5,585 per ounce. Goldman Sachs analysis indicated that the "structural increase in private sector allocation to gold assets," a key upward factor mentioned in previous reports, has begun to materialize, becoming an important driver of gold prices.

The supply-demand dynamics and price-driving logic in the copper market exhibit significant complexity. The team raised its 2026 LME copper price forecast by 7% to USD 12,200 per ton, with the first half of 2026 forecast increased from USD 11,525 per ton to USD 12,750 per ton. The core factor driving price increases is strong inflows of investor capital, which have given copper prices a significant "scarcity premium."

The report further analyzed that current copper inventories outside the United States are at historically low levels, and market expectations of potential copper tariffs in the U.S. are prompting metal flows into the U.S., further exacerbating supply tightness in other regions globally. However, Goldman Sachs also cautioned about short-term adjustment risks, maintaining its forecast of USD 11,200 per ton for copper prices in the fourth quarter of 2026, believing that if tariff policies are implemented, stockpiling behavior in the U.S. market may come to an end, and the fundamental oversupply situation globally will reassert itself in price trends.

Scarcity Premium Drives Value Reassessment, Leaders Face Opportunities for Volume and Price Growth

Goldman Sachs pointed out that China's copper and gold mining industry is entering a strategic opportunity period characterized by the dual dynamics of "price increases and capacity expansion."

Leading companies with outstanding production growth prospects will particularly benefit. The report expects that some major producers may achieve copper production growth of 9% to 14% in 2026. Based on their existing project pipelines, related companies are generally expected to reach production targets by 2028, with total output potentially increasing by 40% to 45% compared to 2025 levels In addition, in the context of high gold prices, merger and acquisition activities within the industry have become more active, as companies accelerate the acquisition of high-quality gold assets, further strengthening their potential for profit growth.

From a valuation perspective, the current market pricing still appears conservative. Goldman Sachs analysis indicates that if calculated based on the expected production targets for 2028, the long-term copper price expectations implied by the current stock prices of some leading companies are only in the range of USD 9,000 to 10,000 per ton, significantly lower than the bank's forecast for the forward market equilibrium price, indicating that the current stage valuations are significantly attractive.

Upgrading Profit Forecasts, Optimistic About Dual Impact of Capacity and Prices

Based on its positive outlook for key metal prices, Goldman Sachs has upgraded its profit forecasts for Chinese mining leaders Zijin Mining and CMOC in its latest research report.

The report points out that Zijin Mining is experiencing a dual drive of capacity expansion and asset acquisitions. Its Phase II project of the Giant Dragon Copper Mine has been completed, significantly increasing the scale of mining and selection, and it is expected that once fully operational, it will significantly enhance the company's overall copper production. Meanwhile, the company has announced plans to acquire Allied Gold, which is expected to add considerable gold resources and profit contributions on top of its existing production. Goldman Sachs has thus raised its recurring earnings forecast for Zijin Mining for 2026 to 2027 by 14% to 18%.

On the other hand, CMOC's copper production guidance exceeds market expectations, mainly due to technological upgrades and efficient operations of existing projects. In addition, the company has completed the acquisition of important gold mining assets in Brazil, which is expected to contribute new gold production and profit growth points in 2026. Based on the positive outlook of rising volume and prices, Goldman Sachs has raised CMOC's recurring earnings forecast for the same period by 20% to 24%.

The report believes that in a structurally high metal price environment, leading companies with clear production growth paths will have significant profit elasticity