Analysis of Zijin Mining's Lithium Carbonate Capacity Expansion and Industry Recovery Opportunities

Based on the collected data, I will provide you with a detailed analysis of the alignment between Zijin Mining’s lithium carbonate capacity expansion and industry recovery opportunities.

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Zijin Mining (601899.SS) had an extremely outstanding stock performance in 2025, with a year-to-date increase of

, far exceeding the industry average [0]. The increase over the past year was 119.15%, over three years 233.63%, and over five years 255.19%, demonstrating sustained growth momentum.

Indicator	Value	Evaluation
Market Capitalization	$889.65 billion	One of the world’s largest gold mining enterprises
ROE	30.60%	Excellent level
Net Profit Margin	13.91%	Healthy
Operating Profit Margin	20.11%	Strong
Current Ratio	1.20	Good short-term solvency
P/E	19.51x	Relatively reasonable

The company has a conservative financial attitude, with a high ratio of depreciation to capital expenditure, meaning there is room for profit growth as investment projects gradually mature [0].

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According to industry data, lithium carbonate prices have experienced a sharp decline:

• Peak at end of 2022
  : Approximately RMB 580,000/ton
• Early 2024
  : Approximately RMB 78,000/ton
• July 2025
  : Approximately RMB 65,000/ton

Calculated from the peak, the decline has approached

[1][2].

: Over the past two years, large-scale lithium mine production has been launched in regions such as Tibet and Sichuan in China, as well as South America and Australia, leading to a surge in supply.

: Although electric vehicle sales are still growing, the growth rate has slowed down; energy storage demand has not yet exploded on a large scale, leading to a lack of support for lithium prices.

: Currently, the spot price of lithium carbonate has approached the cash cost bottom line of some small and medium-sized manufacturers. The marginal cash cost of Chinese lithium salt enterprises is mostly in the range of RMB 50,000-60,000/ton, and the current market price has compressed most profit margins [2].

: If prices fall further to the cost zone, it will accelerate the exit of high-cost suppliers, laying the foundation for lithium prices to rebound from 2026 onwards.

: Unless there is strong restocking demand in the downstream electric vehicle and energy storage markets, lithium prices may still fluctuate in the current range, and the average price next year may still be below RMB 100,000/ton. It is still too early for a structural reversal [2].

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As China’s largest gold producer and a global leading base metal producer, Zijin Mining has actively expanded into the new energy metal sector in recent years. According to public information, the company has lithium salt lake projects in

and other places, and is advancing lithium carbonate capacity construction [1].

• The company’s market capitalization is nearly $900 billion, with abundant cash flow
• Free cash flow reached RMB 24.06 billion [0]
• Capable of supporting large-scale capital investment

• Rich experience in overseas mine development and operation
• Mature mining technology under complex geological conditions
• Strong supply chain management and cost control capabilities

• Profits from traditional businesses such as gold and copper can be used to support the development of lithium business
• Share global sales networks and customer resources

• Expanding capacity during the industry trough period faces greater profit pressure
• Pure lithium companies such as Ganfeng Lithium (002460.SZ) have issued profit warnings, with an expected net loss of RMB 300 million to 550 million in the first half of the year [2]

• As a latecomer, it takes time to establish cost advantages
• Compared with mature lithium industry giants, profitability is weak in the initial stage

• Lithium extraction technology from salt lakes is relatively mature, but the company needs time to accumulate operational experience

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1. Strong Stock Performance
   : Zijin Mining’s performance in 2025 far exceeded expectations, and the market is optimistic about its transformation
2. Reasonable Valuation
   : P/E ratio of 19.51x, which has a higher margin of safety compared to pure lithium companies
3. Diversification Advantage
   : Gold and copper businesses provide stable cash flow, not fully dependent on lithium business
4. Industry Integration Opportunities
   : May accelerate expansion through mergers and acquisitions during the trough period

1. Sustained Low Lithium Prices
   : If lithium carbonate prices remain near the cost line for a long time, it will affect project returns
2. Prolonged Overcapacity
   : The industry expansion wave continues, and supply-demand balance will take longer
3. Policy Uncertainty
   : Changes in new energy vehicle subsidy policies may affect demand
4. Exchange Rate Fluctuations
   : Overseas projects face exchange rate risks

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Zijin Mining’s strategic direction of laying out lithium carbonate capacity is correct, but

:

Dimension	Assessment
Timing	⭐⭐ Relatively unfavorable - The industry is in a trough
Capital Strength	⭐⭐⭐⭐⭐ Obvious advantage
Operational Capability	⭐⭐⭐⭐ Strong
Cost Control	⭐⭐⭐ To be verified
Industry Prospects	⭐⭐⭐ Positive in the medium and long term, under pressure in the short term

1. For Existing Investors
   : Zijin Mining’s fundamentals remain stable. The stock price increase is mainly driven by the rise in gold prices and diversification expectations, and the lithium business will not be a major drag in the short term.

2. For Potential Investors
   : Need to pay attention to the actual progress of the company’s lithium business, including capacity commissioning progress, cost control capabilities, and customer expansion. It is recommended to consider increasing allocation only after clear signs of lithium price bottoming out appear.

3. Key Observation Indicators
   :
   • Lithium carbonate price trend (focus on whether it breaks below the RMB 50,000/ton cost line)
   • Commissioning progress of the company’s lithium projects
   • Changes in gross profit margin of lithium salt business
   • Industry capacity withdrawal situation

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[0] Jinling API - Zijin Mining Company Overview and Financial Data (601899.SS)

[1] Yahoo Finance - Reports on Zijin Mining’s Lithium Business (https://hk.finance.yahoo.com)

[2] Wall Street Journal/Yahoo Finance - In-depth Analysis of the Lithium Industry: Lithium Prices Mired in a Trough, Fundamental Pressures Remain Unresolved (https://hk.finance.yahoo.com/news/鋰價深陷低谷-贛鋒鋰業基本面壓力未解-003107879.html)