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Annual profit of 5.1 billion! Luoyang Molybdenum Industry achieves the best performance in history!

Time

2022-03-23 09:35

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On March 18, Luoyang Molybdenum Co., Ltd. (SH.603993) announced its 2021 performance, with significant growth in operating performance. The annual revenue was 173.86 billion yuan (RMB, the same below),a year-on-year increase of 54%, with a net profit attributable to the parent company of 5.11 billion yuan, a year-on-year increase of 119%, both achieving historical best performance.
 
Rising metal prices drive significant profit growth.
 
 
 
Luoyang Molybdenum stated that the rise in copper and cobalt prices is the main reason for the company's performance growth.
 
Luoyang Molybdenum expects that under the "dual carbon" background, in 2022, the demand for copper related to renewable energy and new energy vehicles will see significant growth. However, due to the uncertainty of the pandemic, it is optimistically estimated that the global supply chain bottleneck will not ease until the second half of 2022, and the overall global copper inventory will remain at a low level, supporting copper prices.
 
The report analyzes that as the global economy gradually recovers from the pandemic and multiple countries implement economic stimulus policies, which are favorable for copper consumption, coupled with the abundant liquidity of the US dollar, and the ongoing impact of global supply chain bottlenecks, copper inventories have fallen to historical lows. Copper prices experienced a rapid rise in the first half of 2021, reaching a historical high of 10,724.50 USD/ton in May 2021. The average annual price of LME (London Metal Exchange) copper spot settlement price in 2021 was 9,317 USD/ton, a year-on-year increase of 50.61%.
 
 
▲LME copper spot settlement price (Image source: Luoyang Molybdenum annual report)
 
The price of cobalt also experienced seasonal fluctuations, rising to a three-year high. Luoyang Molybdenum analyzed that cobalt prices saw significant increases during the strong market demand for stocking at the end of the year to the Spring Festival and the "autumn market" in the third quarter. After August 2021, it continued to rise to 500,000 yuan/ton. The average annual price of cobalt recorded by MB (Metal Bulletin) in 2021 was 23.98 USD/pound, a year-on-year increase of 56.02%.
 
 
▲MB average annual price of cobalt (Image source: Luoyang Molybdenum annual report)
 
When predicting cobalt prices, the company mentioned, "New energy vehicles will still be the main source of incremental cobalt demand. Although the growth rate of lithium iron phosphate batteries during the reporting period was faster than that of ternary batteries, the significant increase in new energy vehicle production continued to drive cobalt demand. The pandemic in South Africa is expected to adversely affect the export of cobalt raw materials from Africa, thus supporting cobalt prices." Luoyang Molybdenum also revealed that looking ahead to the supply side in 2022, there will be new production of cobalt raw materials in the Democratic Republic of the Congo, and the Indonesian nickel hydrometallurgy project will also bring a certain increase in cobalt.
 
 
 
 
Production continues to hit new highs, with the 10K project particularly outstanding.
 
 
 
 
The report shows that in addition to significant growth in operating performance, Luoyang Molybdenum's multiple product outputs set historical records, with TFM copper output reaching a four-year high, cobalt output reaching a three-year high, Brazilian phosphate fertilizer output reaching a new high since the establishment of the factory in Brazil, and IXM's physical sales volume reaching a historical high, achieving a pre-tax profit of 160 million USD.
 
According to the annual report, in 2021, the copper and cobalt output in the Democratic Republic of the Congo was 209,120 tons and 18,501 tons, respectively; the molybdenum and tungsten output in China was 16,385 tons and 8,658 tons, respectively; the niobium and phosphate output in Brazil was 8,586 tons and 1.12 million tons, respectively; and the copper and gold output in Australia's NPM (80% equity) was 23,534 tons and 19,948 ounces, respectively. IXM achieved a trade volume (sales volume) of 2.884 million tons for concentrate products and 3.613 million tons for refined metal products.
 
Among them, the successful construction and production of the company's first large-scale overseas expansion project, the TFM 10K project in the Democratic Republic of the Congo, which exceeded production targets, is considered an important factor in ensuring stable and increased production and significant profit growth for TFM. By December last year, the ore processing capacity of the 10K project reached 161% of the designed capacity.
 
The significant increase in output from this project has broken multiple production records. The company disclosed that in November 2021, TFM's average daily copper production was 690 tons, setting a new monthly average copper production record; from October to December, cobalt metal output refreshed the monthly cobalt production record for TFM for three consecutive months. Excluding the impact of bulk material prices, the average full cost per ton of copper for TFM in 2021 decreased by 3.9% compared to the same period in 2020, and the average full cost per ton of cobalt decreased by 8% compared to 2020.
 
 
 
 
Key projects are being efficiently promoted, and the "2022 construction year" looks promising.
 
 
 
Luoyang Molybdenum's 2021 annual report also revealed the construction progress of several other projects—
 
The TFM copper-cobalt mixed ore project plans to build three production lines, which are expected to increase the annual copper output by 200,000 tons and cobalt output by 17,000 tons after being completed and put into production in 2023, effectively creating another TFM; another world-class high-grade copper-cobalt mine KFM, which the company obtained in 2020, is currently rapidly and orderly advancing preliminary work such as supplementary exploration, environmental assessment, river diversion, and mining rights integration. The Indonesian Huayue nickel-cobalt project, in which the company holds a 30% stake, was put into production at the end of last year. It has currently reached a 50% capacity utilization rate and is expected to produce 60,000 tons of nickel annually, with cobalt as a by-product.
 
It is reported that Luoyang Molybdenum's copper-gold mine in Australia, the North Parks Mine (NPM) E26L1N project, has officially started production. It is expected to provide additional production capacity for the company in the copper and gold metal fields.
 
As of the end of 2021, Luoyang Molybdenum's overseas assets amounted to 118.693 billion yuan, accounting for 86.35% of total assets.
 
It is worth noting that Luoyang Molybdenum disclosed its operating conditions for January-February 2022 on March 16, showing that the output of major products copper, cobalt, and niobium increased by 20%, 52%, and 42% year-on-year, respectively. At the same time, benefiting from the year-on-year increase in sales prices of all products, the company's main operating indicators exceeded expectations, achieving a good start to the year.
 
It is reported that Luoyang Molybdenum has positioned 2022 as the "construction year," which is a key stage for the company to achieve a "step-up" in production capacity. The company's president, Sun Ruiwen, stated, "On the one hand, based on existing high-quality resources, we will accelerate the construction of two world-class mines in the Democratic Republic of the Congo while fully completing various production tasks to ensure the achievement of milestone plans. On the other hand, we will continue to seek acquisition opportunities for new energy metal resources globally to lay a solid foundation for the company to achieve new leaps."
 
 
 
 
About Luoyang Molybdenum Co., Ltd.
 
 
 
Luoyang Molybdenum Co., Ltd. mainly engages in the mining and processing of base metals and rare metals, as well as mineral trade. Currently, its main business is distributed across five continents: Asia, Africa, South America, Oceania, and Europe. It is a global leader in the production of tungsten, cobalt, niobium, and molybdenum, and an important copper producer. It is also the leading producer of phosphate fertilizer in Brazil, with its base metal trading business ranking among the top three globally. It ranked 15th in the 2021 Global Mining Company Top 40 (by market value). The company's traditional main business mainly involves molybdenum and tungsten, which are listed on the Shanghai Stock Exchange and the Hong Kong Stock Exchange (03993.HK) respectively.
 
 
▲ Luoyang Molybdenum Asset Portfolio (Image Source: Luoyang Molybdenum Annual Report)

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