Zijin Mining Group, one of China’s leading producers of copper and gold, is confronting significant challenges to its international expansion efforts. The company, known for its aggressive global acquisitions, has warned that a slowing global economy, rising geopolitical tensions, and the growing trend of resource nationalism could severely limit its ability to pursue new overseas deals.
Despite reporting a strong financial performance in the first half of the year, with net income rising 46% to 15 billion yuan (approximately $2.1 billion), Zijin Mining has flagged concerns about future obstacles that could impact its revenue, profits, and particularly its capacity to engage in mergers and acquisitions (M&A) for new international projects. The company’s latest financial report, released in a stock exchange filing, highlights the increasingly challenging environment it faces as it seeks to maintain its position as a dominant force in the global mining industry.
Zijin’s concerns are rooted in the broader context of China’s central role in the global supply chains for critical minerals, which are essential for industries ranging from electric vehicles to military technology. This dominance has prompted the United States, the European Union, and their allies to ramp up efforts to develop their own mineral resources, reducing their dependence on Chinese suppliers. Such moves pose a direct threat to the growth ambitions of Chinese mining companies like Zijin, which have aggressively pursued acquisitions of copper and gold mines from Canada to Africa. In addition, Zijin has ventured into the lithium market, aiming to become a key player in the supply of materials critical for battery production.
The global political situation has only added to the complexity of Zijin’s expansion strategy. In March, Zijin’s Chairman, Chen Jinghe, acknowledged that the company would likely become a target of efforts led by the United States to curtail China’s dominance in the minerals sector. These geopolitical pressures have already had a tangible impact, leading Zijin to slow down its pace of acquisitions due to rising valuations of potential projects and the uncertain political climate.
In its latest statement, Zijin reaffirmed its commitment to expanding its global footprint, emphasizing its strategic focus on strengthening its resource base both within China and in neighboring countries with friendly relations. However, the company also acknowledged that the road ahead would be fraught with difficulties, particularly as it navigates the increasingly complex interplay of global economic and political forces.
The challenges facing Zijin are further compounded by the shifting dynamics of the global commodities markets. The company has expressed concerns about the future trajectory of several key markets, particularly copper, gold, and lithium. Copper, a metal integral to the global green energy transition, is expected to enter a deficit in the medium to long term due to its rising demand in industries such as renewable energy and artificial intelligence. This looming supply gap could provide opportunities for companies like Zijin, but it also underscores the need for strategic investments and careful planning to secure future supply.
Gold, another major focus for Zijin, is expected to continue fluctuating at high levels, driven by ongoing geopolitical uncertainties that boost its appeal as a safe-haven asset. However, the unpredictable nature of global politics means that gold prices could be subject to sudden and significant changes, adding another layer of risk to Zijin’s operations.
The lithium market, which Zijin has recently entered, presents its own set of challenges. The company noted that the current downturn in lithium prices may persist as the market undergoes a process of supply and demand rebalancing. This volatility could impact Zijin’s efforts to establish itself as a key player in the battery materials sector, where competition is fierce, and the stakes are high given the global push towards electrification and renewable energy.
