SHANGHAI, Sept. 2 (SMM) -- Zijin Mining Group released its Midyear Report for 2011. According to the report, the gross profit rate of zinc ingot was 1.36%, down 6.89% on a YoY basis, compared to 8.25% in the same period last year.
 
The sales revenue of Zijin Mining was RMB 1.389 billion, up 39.71% on a YoY basis, and the business cost was RMB 1.37 billion, up 50.20% compared to the same period last year, with the gross profit rate 1.36%, down 6.89% YoY. The profitability of zinc ingot weakened in 1H due to rising business costs, despite higher unit selling price and larger sales volume. The report revealed that the sales volume at Bayannaoer Zijin Non-ferrous Metal Company, a subsidiary of Zijing Mining, grew 37.02% in 1H 2011, leading to an increase of RMB 9.17 million in sales costs, a 27.19% of the total growth in Zijin Mining's sales costs.
 
SMM understands that production costs of zinc ingot increased significantly this year. Due to domestic raw material supply shortages and low imports of zinc concentrate, domestic zinc concentrate prices only fell slightly despite plunging zinc prices. Meanwhile, smelters were in the face of falling TC, a deeper factor of increasing costs. In addition, rising costs of auxiliary materials, manpower and environmental protection input as well as energy also weakened the profitability of zinc ingot.
 
The Midyear Report anticipates that Zijin Mining's major business indicators should continue growing. But the inflation speculation, rising costs, higher requirements for safety and environmental protection, the negative affects of the elimination of the hi-tech enterprise qualification, which is a result of the "7.3"accident, as well as the "9.21" accident, will leave the enterprise in the face of great challenges.