360 billion mining giant’s performance explodes, net profit first surpasses 20 billion, institutions: still need to rise 50%

Ask AI · Why do institutions remain optimistic about Luoyang Molybdenum’s profit exceeding 30 billion despite growth challenges?

Reporter | Dong Peng

Editor | Luo Yifan Zhang Jiayu

Sell-side institutions have once again raised their profit forecasts for Luoyang Molybdenum.

Recently, Luoyang Molybdenum held an earnings briefing, where the new management team introduced production prospects for copper and gold in 2026, as well as acquisition strategies.

Subsequently, multiple sell-side firms raised their profit expectations for 2026 to over 30 billion yuan, with the highest forecast approaching 37 billion yuan in net profit, and the lowest exceeding 31 billion yuan.

It is worth noting that during 2024 and 2025, the company’s net profit growth rate exceeded 50%, and by 2025, the company’s profit base had risen to 20.3 billion yuan, breaking the 20 billion yuan mark for the first time. Maintaining over 50% growth is clearly more difficult, so why do these institutions still have such strong confidence in its growth?

This may be partially explained by the company’s annual report and earnings briefing.

“By 2026, gold production (consolidated) is expected to be between 6 and 8 tons, aiming for 8 tons. The copper production guidance is 760k to 820k tons, which will still see some increase compared to 2025,” said Peng Xuhui, President of Luoyang Molybdenum.

In addition, after investing hundreds of millions in acquiring gold mines in 2025, Luoyang Molybdenum may also initiate new resource acquisitions in 2026. Coupled with cost reductions from scaling up and improved recovery rates, the company’s overall profitability indeed has room for further improvement.

Of course, these are only forecasts based on known conditions. The future trend of prices for copper, gold, and other metals remains uncertain, and sell-side profit expectations will continue to be dynamically revised.

On April 2, influenced by recent adjustments in international precious metal prices, Luoyang Molybdenum continued its decline, closing down 2.91% at 17.71 yuan per share, with a latest market value of 368 billion yuan.

Gold Mine Consolidation, Copper Mine Expansion

When commodity prices enter an upward cycle, the overall trading activity in the industry quickly intensifies, as seen in recent years with Zijin Mining, China Molybdenum, and others entering the lithium sector.

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2025 is expected to be a golden year for the gold industry, with many Chinese companies including Luoyang Molybdenum announcing acquisitions of overseas gold mines and assets.

In April and December of the same year, Luoyang Molybdenum spent approximately 2.98 billion yuan and 7.17 billion yuan respectively to acquire gold assets such as the Cangrejos gold mine in Ecuador and the Aurizona gold mine in Brazil.

The Brazilian gold assets include 100% interests in the Aurizona gold mine, RDM gold mine, and Bahia comprehensive mining area. The project was completed in January this year, while the Ecuador Olin mine is still under construction, with plans to start production by 2029.

Therefore, the aforementioned consolidated Brazilian gold mine project is currently the company’s most certain incremental project. The company’s annual report guidance for 2026 is a gold output of 6 to 8 tons.

“(The company) will tap potential and improve efficiency, striving to achieve the 8-ton production target,” Peng Xuhui said at the recent earnings briefing.

Based on the latest London gold spot price, 8 tons of gold would be worth about 8 billion yuan, most of which would translate into revenue growth for Luoyang Molybdenum.

Meanwhile, peer companies that have disclosed annual reports report gross profit margins for mineral gold generally above 50%, with some reaching 80%. The Brazilian gold mines are also expected to bring the company tens of billions of yuan in profit increments.

The copper sector, which contributes most of Luoyang Molybdenum’s profits, currently has no clear new capacity additions planned for 2026. The KFM Phase II project, one of the “Twin Stars,” is not expected to start production until 2027. However, the company still has room to optimize existing capacity.

Regarding its main mines, Vice President Chen Xingyao said, “Previously, TFM’s daily processing capacity was 63k tons, now it has increased to 80k tons after capacity expansion.”

In 2026, Luoyang Molybdenum plans to further increase copper production to between 760k and 820k tons. Although the growth rate will be slower than in previous years, there is still potential for about 50k tons of additional output.

“Starting from small metals, the company has inherent small metal genes. Last year, it benefited from small metals, which is also one of the long-term foundations of the company’s development,” said Chairman Liu Jianfeng. He added that in 2025, molybdenum, tungsten, and other businesses contributed solid financial returns.

He pointed out that beyond focusing on the “copper-gold strategy,” the company will extend its core technology into the small metals sector, fully exploring the value of associated resources, and may seek independent small metal mine projects when appropriate.

These potential external acquisitions could also bring new performance growth.

Furthermore, based on Luoyang Molybdenum’s current profit structure, molybdenum, tungsten, and cobalt products generated gross profits of 8 billion yuan in 2025, making them the second-largest profit sources after copper.

All these small metals prices are expected to be significantly higher than in 2025, especially tungsten concentrate, which has seen the most notable increase.

Antaike data shows that before 2025, black tungsten concentrate (65%, domestic) prices hovered around 150k yuan per ton for a long time. After breaking previous highs in the second half of 2025, prices surged sharply in Q4 2025 and Q1 2026.

Since mid-March this year, prices have remained above 1 million yuan per ton, so Luoyang Molybdenum’s profitability in small metals is also expected to improve significantly.

Supported by prices still at historic highs compared to 2025, especially for copper and gold, which are well above previous levels, the company’s revenue in 2026 is likely to benefit from both volume and price increases.

“622 Model” and Platform Building

To promote external resource acquisitions, expand existing projects, and grow revenue, Luoyang Molybdenum’s new management team is also seeking breakthroughs in cost control.

At the earnings briefing, Chen Xingyao cited the cost reductions achieved through scale effects after increasing production in the Democratic Republic of Congo, as well as the benefits of higher recovery rates.

According to reports, TFM’s copper flotation recovery rate, equipment utilization, and ore processing volume in Q4 2025 exceeded schedule; KFM built a mineral database and blending model, with comminution efficiency improving by over 30%; Luoyang Molybdenum’s Brazil niobium plants increased recovery rates by about 2 percentage points year-over-year; and the Sanhedao molybdenum plant also hit record high recovery rates.

Annual report data also shows that in 2025, Luoyang Molybdenum’s operating costs decreased by 11.56%, significantly more than the 2.98% decline in revenue, while the main profit-generating mining and processing segments saw much smaller cost increases relative to revenue growth.

“The essence of mining competition is cost competition, a systematic capability competition based on resource endowment,” the company stated in its annual report.

In the company’s view, three factors determine cost levels:

First, the resource’s natural endowment and industrial extraction conditions—fundamental, innate, and unchangeable prerequisites. Second, how to build an efficient, low-cost management team. Lastly, as a relatively closed industry, mining has the potential to leverage technological means to reduce costs and improve efficiency.

In its 2025 annual report, Luoyang Molybdenum also publicly explained its “622 Model” for the first time.

That is, 60% of cost advantage is determined by resource endowment, with strategic acquisitions defining the company’s core and genetic traits; 20% depends on project planning and construction to optimize full lifecycle costs; and the remaining 20% is determined by daily operational management, leveraging China’s comparative advantages.

Over the past decade, Luoyang Molybdenum has captured multiple world-class assets precisely through this resource moat, accounting for 60% of the cost model.

However, to turn its resource advantages into capacity and cost advantages, and to achieve systemic competitiveness, the company needs to focus on the remaining 20%—“planning and construction” and “daily operations.”

For example, standardizing, process optimization, and intelligentization across project planning, construction, and operation, covering exploration, mining, beneficiation, smelting, environmental management, and trading.

This is not empty talk; for instance, Zijin Mining’s Tibet Julong copper mine heavily relies on early project planning and later operational capabilities, which not all mining companies can achieve.

From this perspective, Luoyang Molybdenum is also seeking to build a standardized, output-ready platform management system similar to Zijin’s “Five Rings in One” through platformization.

By 2026, leveraging the “622 Model” to expand resource scale and consolidating global “platform capabilities,” Luoyang Molybdenum has elevated this to a position alongside its “copper-gold dual strategy.”

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(Disclaimer: The content of this article is for reference only and does not constitute investment advice. Investors operate at their own risk.)

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