Key Takeaways:
Zijin Mining Group Co. (2899.HK) reported first-quarter net profit nearly doubled to 20 billion yuan ($2.76 billion), as surging prices for metals, particularly lithium, powered the producer’s earnings growth.
"The results were largely a beat, but we are slightly trimming our 2026-2028 profit forecasts by 2 percent on adjustments," Bank of China International analysts said in a note, reiterating a "Buy" rating while lowering the target price to HK$46.84.
The growth was underpinned by the company's expanding lithium business, which saw its gross profit increase 2.5 times compared to the fourth quarter of 2025. The company produced 16,000 tonnes of lithium carbonate equivalent (LCE) during the period and recorded a 2.8 billion yuan gain from fair value changes. However, mined zinc output fell 4 percent year-over-year to 84,500 tons.
The conflicting signals—a massive profit beat versus a cautious analyst revision—highlight the volatile environment for commodity producers. While Zijin is capitalizing on the current price boom, questions remain about future growth and operational consistency across its diversified portfolio.
Zijin's pivot to battery metals is paying off handsomely, placing it among the top performers in a sector benefiting from a tight market. The company's 100 percent year-over-year profit growth comes as competitors like Ganfeng Lithium and Tianqi Lithium forecast profit surges of up to 822 percent and 1,818 percent, respectively. The performance is supported by a bullish long-term outlook, with firms like Canaccord projecting a near-decade-long deficit in the global lithium market through 2035.
While lithium grabs the headlines, performance in Zijin's legacy base metals portfolio was mixed. Mined zinc production declined 4 percent from the prior year, and refined zinc output dropped 10.6 percent to 89,800 tons, reflecting broader market tightness in zinc concentrate.
Furthermore, the company faces potential operational headwinds abroad. According to reports, Ghana’s Minerals Commission has directed mining companies, including Zijin, to transition operations to local contractors by December 2026. This could introduce new execution and cost risks for the company's assets in the region.
The strong earnings demonstrate Zijin's successful capture of high commodity prices, especially in lithium. However, investors will be watching for the company's ability to manage costs and operational challenges in its other segments, particularly as analysts begin to price in a more cautious long-term outlook.
This article is for informational purposes only and does not constitute investment advice.
