Analysis of the Impact of Higher Entry Barriers for Mineral Processing Projects on the Non-Ferrous Metal Industry Landscape

The State Council issued the Solid Waste Comprehensive Management Action Plan, which sets strict environmental protection requirements for the non-ferrous metal industry. Key policy points include:

• Mineral processing projects must have self-owned mine resources
• Must be equipped with tailings utilization and disposal facilities
• Promote integrated heavy non-ferrous metal mining and processing construction
• Encourage nearby tailings filling and backfilling utilization

This policy will fundamentally change the competitive landscape of the non-ferrous metal industry and accelerate industry integration.

According to the latest data analysis, large enterprises with self-owned mine resources will benefit significantly:

• Top Left: Market Cap Comparison
  - Zijin Mining leads with a market capitalization of $91.459 billion, showing strong scale advantages
• Top Right: ROE Comparison
  - Zijin Mining’s ROE reaches 30.60%, with the strongest profitability
• Bottom Left: Comprehensive Financial Health Score
  - Evaluated from four dimensions: profitability, profit margin, liquidity, and stock price performance
• Bottom Right: Policy Benefit Degree Evaluation
  - Zijin Mining scores the highest (95 points), followed by China Molybdenum (85 points)

• Independent mineral processing enterprises
  lack self-owned mines and cannot meet new entry conditions
• Environmental investment costs
  increase significantly, which SMEs cannot afford
• Tailings treatment facilities
  construction and operation require large capital expenditures
• Industry chain integration
  accelerates, driving the industry to concentrate on leading enterprises

• Most abundant self-owned mine resources
  - owns one of the world’s largest gold and copper mines
• Market cap leader
  - market capitalization of $91.459 billion, far exceeding other enterprises [0]
• Outstanding profitability
  - ROE of 30.60% and net profit margin of 13.91% [0]
• Conservative and stable finance
  - conservative accounting policies, high depreciation/capital expenditure ratio [0]
• Strong free cash flow
  - latest free cash flow of $24.063 billion [0]

• ✓ Already has complete mining and processing integration capabilities
• ✓ Possesses advanced tailings treatment technology and facilities
• ✓ Scale advantages can bear environmental investment costs
• ✓ Can integrate eliminated SMEs through mergers and acquisitions

Year-to-date increase of 122.53%, and an increase of up to 177.76% during the 2024-2025 period [0]

• Diversified resources
  - copper, cobalt, molybdenum, and other metals
• Excellent ROE
  - 26.48%, second only to Zijin Mining [0]
• Best liquidity
  - current ratio of 1.57, quick ratio of 1.00 [0]
• Impressive stock price performance
  - year-to-date increase of 193.69%, and an increase of 283.88% during the 2024-2025 period [0]

• ✓ Abundant overseas mine resources, avoiding domestic environmental pressure
• ✓ Leading tailings resource utilization technology
• ✓ Strong demand for new energy metals, with good long-term growth

• Strongest liquidity
  - current ratio of 1.53, quick ratio of 1.01 [0]
• Stable ROE
  - 19.77%, with good profitability [0]
• Reasonable valuation
  - P/E ratio of 14.63x, P/B ratio of 2.84x [0]
• Adequate cash flow
  - EV/OCF of only 7.11x [0]

• ✓ The aluminum industry is relatively mature with complete environmental protection facilities
• ✓ State-owned background, strong policy support
• ✓ Adequate cash flow to cope with environmental investment

• Copper industry leader
  - China’s largest copper producer
• Large market cap
  - $18.978 billion [0]
• Leading year-to-date increase
  - 165.31% [0]

• ✗ Aggressive financial attitude, low depreciation/capital expenditure ratio [0]
• ✗ Negative free cash flow (-$4.083 billion) [0]
• ✗ Weak profitability with net profit margin of only 1.54% [0]

• Extremely high operating profit margin
  - 52.38% [0]
• High degree of internationalization
  - main assets in Australia and Africa
• Largest year-to-date increase
  - 267.74% [0]

• ✓ Overseas operation, avoiding domestic policy restrictions
• ✓ Internationally advanced environmental standards and tailings treatment technology

• Acquire mine resources from eliminated SMEs
• Integrate mineral processing capacity to enhance scale effect
• Optimize industry chain layout to reduce costs

• Valuable metal recovery technology from tailings
• Tailings filling mining technology
• Tailings building material utilization technology
• Tailings pond ecological restoration technology

According to search results, enterprises like Huayou Cobalt have invested over 400 million yuan in environmental protection funds and obtained Responsible Minerals Initiative certification [1], and MMG Limited has also made significant progress in tailings resource comprehensive utilization [1].

1. Top Pick:
   Zijin Mining - Largest policy beneficiary, most abundant self-owned mine resources, most stable finance
2. Focus on Growth:
   China Molybdenum - High ROE, benefiting from new energy metal demand
3. Stable Allocation:
   Aluminum Corporation of China - Financially stable, adequate cash flow

1. Policy Execution Risk
   - Policy execution intensity may be lower than expected
2. Metal Price Volatility
   - Non-ferrous metal price fluctuations affect profitability
3. Environmental Investment Exceeds Expectations
   - Environmental technology transformation investment may exceed budget
4. Overseas Operation Risk
   - Overseas assets face political and exchange rate risks

1. Continuous Increase in Concentration
   - It is expected that in the next 3-5 years, the industry CR5 (concentration of top 5 enterprises) will increase from the current about 40% to over 60%
2. Accelerated Green Transformation
   - Environmental protection technology will become core competitiveness, and tailings resource utilization will become a new growth point
3. Industry Chain Integration
   - Vertical integration from mining to smelting and processing will become the mainstream model
4. International Layout
   - More enterprises will turn to overseas resources to avoid domestic environmental pressure

Large enterprises with self-owned mine resources and tailings treatment capabilities will gain:

• Increased market share
  - Expand scale through mergers and acquisitions of eliminated SMEs
• Enhanced pricing power
  - Increased production concentration brings pricing advantages
• Valuation premium
  - ESG advantages are recognized by the market

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Higher entry barriers for mineral processing projects are an important measure for supply-side reform in the non-ferrous metal industry, which will accelerate industry clearing and concentration increase. will be the largest policy beneficiary with the most abundant self-owned mine resources, strongest profitability, and most stable financial status. and also have significant investment value. Investors should focus on leading enterprises with integrated mining and processing capabilities and advanced environmental protection technology.

[0] Gilin AI Broker API Data - Includes all enterprise financial data, stock price data, and financial analysis data

[1] Huayou Cobalt 2024 Annual Report - Information on environmental protection investment and responsible mineral certification
Source: https://www.huayou.com/Public/Uploads/uploadfile/files/20250512/20250419603799.SHhuayouye603799huayouye2024nianniandubaogao.pdf

[2] China Non-Ferrous Metal Mining Annual Report - Progress in tailings resource utilization technology
Source: https://www.cnmcl.net/media/33gnfvfw/hkex-eps_20250425_11641473_0cn.pdf

[3] MMG Limited 2024 Annual Report - Tailings resources and environmental protection technology
Source: https://www.mmg.com/wp-content/uploads/2025/04/c_2025-04-24_2024-Annual-Report.pdf

[4] Guangxi’s Role in Critical Metals - Xinhua News Report
Source: http://gx.news.cn/20251103/04fc8fb9a9cf4f668ae5c85e85aa6a57/c.html