¿Los precios del cobre siguen altos pero no hay minas para vender? El progreso de la reactivación de las minas de Hebei Steel Resources en Sudáfrica muestra una división: la fase uno de cobre ya ha reanudado operaciones con carga baja, y se espera que la fase dos de cobre termine de drenar el agua a principios de abril.

每经记者|彭斐    每经编辑|杨军

Just released a positive signal to the market that “the ramp-up of Phase II copper production is going smoothly,” Hebei Steel Resources (SZ000923, stock price 20.13 yuan, market value 13.139 billion yuan), has unexpectedly encountered severe tests from natural forces on its path to resumption.

On the evening of March 17, Hebei Steel Resources disclosed the latest progress announcement regarding the resumption of underground mining at its South African subsidiary. The announcement showed that, due to the most severe flooding disaster since 2000, the production of Palabora Copper Company (PC) under the company had to be completely suspended.

The reporter from the “Daily Economic News” noted that the latest announcement indicated that the resumption progress at the mining area is showing divergence: while Phase I copper has completed drainage and resumed production, it is still operating at a low load; as for Phase II copper, which is designed to be the main supply source with a capacity of 11 million tons/year, it is still being drained due to its deeper terrain, and it is expected to be completed in early April.

Against the backdrop of international copper prices fluctuating above 100,000 yuan/ton, the two-month halt in copper business will undoubtedly have an adverse effect on the company’s annual production and sales plan. However, the silver lining is that the approximately 100 million tons of iron ore stored on the surface of the company has not been affected by the disaster, and production and shipping are currently normal. This “cash cow” business, which contributes over 60% of revenue, may become the only “ballast stone” to hedge against this unexpected risk and support the annual performance.

In early 2026, an extreme rainstorm in South Africa disrupted Hebei Steel Resources’ production rhythm.

According to a disclosure by the company on February 5, due to continuous heavy rainfall and regional flooding, the location of its subsidiary Palabora Copper Proprietary Limited (PC) in Limpopo Province, South Africa, and the neighboring Mpumalanga Province, has suffered from the most severe flooding disaster since 2000.

Local meteorological data shows that the area experienced a monthly rainfall of over 890 mm in January 2026, significantly higher than the national average annual rainfall of about 450 mm to 500 mm in South Africa. The heavy rain caused a large influx of water from open pits and surrounding areas into the company’s mine, directly leading to flooding in some tunnels of Phase I and Phase II copper, and some key facilities were submerged. The PC company was forced to suspend the production and construction activities of the underground mine at the beginning of the disaster.

After nearly two months of rescue efforts, the resumption work has finally made substantial progress, but the overall progress is mixed.

According to the announcement released by Hebei Steel Resources on the evening of March 17, as of now, the underground drainage operations for Phase I copper have been completed, and production has resumed. Given that the underground was previously affected by flooding, to ensure production safety, it is currently operating at a low load, and the output will be steadily and gradually increased based on the safety condition on-site. However, regarding Phase II copper, due to the working area being at a deeper level, the drainage progress is relatively slow, and drainage operations are still being carried out, expected to be completed in early April.

In addition, the flooding has also directly affected the construction of supporting facilities. In an investor communication on February 11, Hebei Steel Resources revealed that “the No. 6 crusher project supporting Phase II copper had previously progressed smoothly, with some equipment already on-site and currently in the construction phase. However, due to the impact of this underground flooding, the on-site construction progress has been disrupted, and personnel and equipment scheduling have been limited. Therefore, the plan originally scheduled for use in the third quarter of 2026 is expected to be delayed.”

The reporter from the “Daily Economic News” noted that this divergent resumption progress is a “painful feeling” for Hebei Steel Resources. In a previous institutional research in January, the company clearly stated that due to the low ore grade of Phase I copper and its proximity to the closure stage, the supply of copper products at this stage mainly comes from Phase II copper.

It is reported that the Phase II copper project was previously in the “ramp-up stage,” with a designed production capacity of 11 million tons/year, expected to reach the designed capacity standard by the end of 2026. Now, with the main mining area deeply trapped in drainage issues, combined with the current copper price rising from less than 70,000 yuan/ton at the beginning of last year to above 100,000 yuan/ton (an increase of nearly 50%), missing the production window during this high-price period will bring noticeable opportunity costs.

According to information from CICC Futures on March 17, the characteristics of strong expectations versus weak realities are expected to keep copper prices operating at high levels.

Hebei Steel Resources candidly stated in the announcement on the evening of March 17 that, given the interference caused by this event on underground mining operations, it is expected to adversely affect the company’s annual copper product production and sales plan, with the specific impact degree needing to be comprehensively assessed in conjunction with subsequent resumption conditions.

As the underground copper mining business is mired in difficulties due to force majeure, the “dual-wheel drive” business structure of Hebei Steel Resources has shown its resilience against risks at a critical moment.

Unlike copper mines buried deep underground and prone to flooding, the iron ore of Hebei Steel Resources mainly comes from surface stockpiles, providing a natural risk-averse advantage. The announcement repeatedly released reassurances about the iron ore business: “As of the date of this announcement, the company has approximately 100 million tons of iron ore stored on the surface. Currently, the production and shipping of surface iron ore are normal, with an expected annual sales volume of 10 million tons.”

This 100 million tons of iron ore stored on the surface is actually a by-product generated during the processing of copper ore. After decades of mining accumulation, it has become the foundation supporting the company’s performance today.

The reporter from the “Daily Economic News” noted that, from past financial data, the iron ore business can be described as the “cash cow” of Hebei Steel Resources. For example, in the first half of 2025, iron ore contributed 1.83 billion yuan in revenue, accounting for a staggering 64.84% of the company’s revenue during that period.

On the logistics front, the situation is also developing favorably. As the South African economy gradually recovers, the demand for railway capacity in the area is showing a gradual increase, ensuring the smooth transportation of surface products.

“The company plans to carry out deep processing of the stored iron ore through upgrading processes such as modifying the grinding system and adding drying procedures, aiming to achieve an annual output of 6 million tons of iron ore with a grade of 65%, while enhancing product quality stability to increase the market competitiveness of high-grade iron ore and further reduce costs and increase efficiency,” Hebei Steel Resources mentioned in an investor communication on January 15.

Hebei Steel Resources also stated that after the ore grade is improved from 58% to 65%, although the cost per ton slightly increases, due to the price difference, the overall economic benefit will improve.

However, even with iron ore as a performance “ballast stone,” the obstacles in the copper business remain the biggest challenge the company faces this year. Hebei Steel Resources explained in the January research the core reason for the low gross profit margin of its copper products: “It is due to the fact that Phase II copper has not yet reached full production, the scale of copper output is relatively small, but the fixed costs that need to be borne are relatively high, leading to significant pressure on the fixed costs allocated per unit product, which in turn lowers the overall gross profit margin level.”

With the uncertainty of the resumption of Phase II copper production, during the gap period caused by the obstruction of underground resumption, the fully operational iron ore business will undoubtedly take on the revenue banner for Hebei Steel Resources. In the announcement on the evening of March 17, Hebei Steel Resources stated that the company will continue to guide PC to orderly promote the resumption of copper products under the premise of ensuring safety, and will promptly disclose relevant progress in periodic reports or temporary announcements according to relevant regulations.

Overall, while the 100 million tons of iron ore can provide a solid support, when Phase II copper can fully reach production capacity remains the biggest variable hanging over the performance of Hebei Steel Resources in 2026.