[colored Changwen] how is the 100 billion asset faucet refined? An Encyclopedia of Luoyang Molybdenum Industry, a leading Mining Enterprise

SMM1 24:

Company business carding: copper, cobalt, molybdenum, tungsten, niobium, phosphorus

Mo-W business: with three world-class mines

Copper business: the overall strength ranks among the top three in the country

Niobium and phosphorus business: jump to the second largest in the world

Luoyang Molybdenum Industry, that is, Luoyang Luanchuan Molybdenum Industry Group Co., Ltd., is located in Luanchuan County, Luoyang City, Henan Province, Chengdong New District Thrushen Mountain Road to the north of Yihe. The company belongs to the non-ferrous metal mining industry, mainly engaged in copper, molybdenum, tungsten, cobalt, niobium, phosphorus and other mining, smelting, deep processing and other business, With a relatively complete integrated industrial chain is currently listed on the Shanghai Stock Exchange (stock code: 603993) and the Stock Exchange of Hong Kong Limited (stock code: 03993).

Currently, Luoyang Molybdenum is the world's top five molybdenum producers and largest tungsten producers, the world's second largest cobalt and niobium producer and the world's leading copper producer, as well as the second largest phosphate fertilizer producer in Brazil. The largest shareholder of the company is Hongshang Industrial Group holding Co., Ltd., with a shareholding proportion of 24.69%, and the second largest shareholder of the company is Luoyang Mining Group, which is owned by Luoyang State-owned assets Supervision and Administration Commission, with a shareholding ratio of 24.68%.

Company business carding: copper, cobalt, molybdenum, tungsten, niobium, phosphorus

The Copper Industry of the Company's Business carding

Luoyang Molybdenum Industry is a leading copper producer in the world, selling electrolytic copper and copper concentrate in the international market. As one of the important basic industrial raw materials, copper is an indispensable material in industrial production and residents' life because of its industrial and financial properties at the same time. Its consumption is second only to aluminum in non-ferrous metal materials. From the point of view of the main consumption areas, the United States, Japan and Western Europe, as the traditional three major copper consumption areas, consumption has been maintained at a relatively stable level.

Copper prices continued to fall from 2011 to 2015, resulting in heavy losses in the industry, leading to a slowdown in mine construction at this stage. In recent years, the trend of "aging" of mines in the world is becoming more and more serious. About half of the copper mines in the world have been older than 50 years. Due to the long mining time, the grade of existing mines is declining year by year. In the long run, copper mining is becoming more and more difficult and expensive. According to data from commodity analyst Wood Mackenzie, in addition to the Cobre Panama copper mine, which has a production capacity of 320, 000 tons per year, the world's copper mine will be put into production in 2018. There are almost no new large mining projects put into production before 2020, and the increment of copper mines mainly comes from reconstruction and expansion projects. The increase in copper supply is slowing, leading to structural shortages, while downstream demand is stable, and the amount of copper used for new energy vehicles is expected to become a new growth point of downstream demand.

Cobalt Industry of Company Business carding

The company is the second largest cobalt producer in the world, selling cobalt hydroxide in the international market. According to the United States Geological Survey in 2017, the world's proven land cobalt reserves in 2016 were about 7.1 million tons, highly concentrated in the Democratic Republic of the Congo, Australia and Cuba. Among them, the Democratic Republic of the Congo (DRC) has 3.4 million tons of cobalt reserves in 2016, accounting for 47.9 percent of the world's total cobalt reserves, ranking first in the world. For a long time, cobalt minerals or cobalt compounds have been used as glazes for ceramics, glass and enamel.

By the 20th century, cobalt and its alloys have been widely used in electrical, mechanical, chemical, aerospace and other industrial sectors, and become an important strategic metal, and the consumption is increasing year by year. Cobalt is one of the most common metal materials for cathode of lithium battery. Lithium cobalt acid made of lithium carbonate and cobalt oxide is the most widely used cathode material for high energy battery. In the future, the newly built and completed cobalt smelting projects in the market will face overcapacity and increased competition in the industry, and the more definite capacity expansion will mainly come from Glencore and Eurasian resources. With the vigorous development of new energy vehicle market, ternary materials continue to promote, cobalt demand will continue to increase.

The Molybdenum Industry of the Company's Business carding

The company is one of the top five molybdate producers in the world. The main sales market of molybdenum products is in China. Price trend is affected by economic development factors, supply and demand conditions, speculative factors and emergencies and other factors. Because Mo is mainly used in iron and steel industry, the change of Mo price is closely related to the market of stainless steel and high-end steel. Affected by the global financial crisis in 2008, the steel production, which is driving the growth of molybdenum demand, has been sharply reduced, which has made the already weak stainless steel market even worse. In addition, the continuous production of new Mo mines at home and abroad has led to a continuous increase in the supply of Mo industry, the intensification of overcapacity, and the repeated decline of international Mo prices.

From 2009 to 2015, molybdenum prices have been in the downward channel, low shock. Under the influence of China's supply-side reform in 2016, inefficient and high-cost production capacity was shut down and reduced one after another, superimposed stricter and regular environmental protection inspection, and the situation of overcapacity at the supply side was gradually cleared. Since 2017, under the influence of supply-side reform and the normalization of environmental protection supervision, the iron and steel industry has accelerated the adjustment of industrial structure and product upgrading, the operating environment of iron and steel enterprises has improved, and the output of high-end steel and stainless steel has continued to increase. Lead the Mo consumption to heat up gradually, the price rises steadily.

Tungsten Industry of Company Business carding

The company is one of the largest scheelite manufacturers in the world, and the main sales market of tungsten products is in China. At present, the Sandaozhuang mine is the largest single tungsten mine in production. China, the world's largest tungsten producer, accounts for more than 80 per cent of tungsten supply. The tungsten industry in which the company is located has been in the current situation of overcapacity, oversupply and de-inventory in recent years. Under the pressure of weakening demand and difficult inventory, the tungsten market continues to fluctuate at a low level. The market price once fell below the cost line of tungsten production enterprises, resulting in the suspension or control of production by some mining enterprises, and the decline of the overall production capacity of the market. Since 2017, the increasingly stringent environmental protection and safety verification has led to the shutdown of mine production, the inventory consumption of manufacturers in the lower reaches of tungsten mines, and the supply and demand of tungsten market once again in short supply. At the same time, with the recovery of the overseas economy and the stabilization and recovery of the domestic economy, the export volume of domestic tungsten products has greatly increased compared with the same period last year, and the demand for cemented carbide and tungsten chemical products has increased in the mining industry, mechanical processing industry, construction industry, chemical industry, and other industries. Tungsten prices remain stable and rising.

Niobium Industry of Company Business carding

The company is the second largest niobium producer in the world, selling iron niobium in the international market. The niobium industry has a very high global market concentration., CBMM (Brazil Mining and Metallurgical Company, the world's largest niobium mining company, is engaged in the development, industrialization and commercial operation of related niobium products) accounting for 80% to 85% of the global market. It is absolutely dominant in the industry, has a strong influence on the niobium price trend, and controls the progress of the global niobium production expansion plan, so the niobium price has maintained a relatively stable level in history.

Niobium is one of the indispensable raw materials for high quality steel, with very few substitutes and small dosage in iron and steel production, so that the cost of iron and steel production is relatively low. The above factors make the price elasticity of iron niobium demand low and the performance is relatively stable. With the continued recovery of the steel industry in 2017, especially the gradual growth of stainless steel and high-end steel production capacity in China, niobium demand will continue to increase, providing a strong support for niobium prices.

Phosphorus Industry of Company Business carding

The company is the second largest producer of phosphate fertilizer in Brazil, selling phosphate fertilizer products in the Brazilian market. Brazil is one of the world's leading producers and exporters of agricultural products, including soybeans, corn, sugar cane, coffee, oranges, beef and chicken. With the high demand for fertilizer, Brazil has become the fourth largest fertilizer consumer in the world, with annual demand far exceeding its domestic production. MAP and calcium superphosphate ("SSP") are the main phosphate fertilizer products in Brazil, respectively. Brazil is not rich in phosphate rock reserves, and the content of P2O5 in phosphate rock is relatively low, so it is necessary to import a large number of chemical fertilizer products from Russia, the United States, China and other countries.

In order to encourage the development of agriculture and related industries, both the federal government and the state governments of Brazil have adopted preferential policies for fertilizer producers in terms of taxes. in view of the rapid development of agriculture in Brazil, the demand for phosphate fertilizer will continue to grow steadily in the future. The company's two phosphating plants are located in the agricultural heartland of Brazil, with a clear geographical advantage, making the company one of the lowest-cost producers in important regions.

Mo-W business: with three world-class mines

In the early stage of Luoyang Mo industry, Mo-W business was the main business. After the A shares were listed in 2012, the company began to actively carry out overseas mergers and acquisitions to carry out resource layout. Following frequent acquisitions of high-quality overseas resources, with the recovery of global commodity prices, the company began to usher in the harvest season. The performance increased substantially in 2017, with operating income of 24.148 billion yuan, an increase of 247.47 percent over the same period last year, and a net profit of 2.7 billion yuan, an increase of 173 percent over the same period last year. Operating income increased by 20.63% in the first half of 2018 compared with the same period last year, and net profit increased by 27.4% compared with the same period last year.

The company acquired assets overseas:

In 2016, the company acquired assets from the niobium and phosphorus business in Brazil and the Tenke mine totaling more than US $4 billion. In order to complete the transaction as soon as possible, the company used its own funds and bank loans to pay for the transaction. The transaction process has been greatly accelerated, from the release of the acquisition plan to delivery in less than half a year. In 2017, the company completed a huge increase of 18 billion, and then used the fixed increase funds in exchange for some of the transaction advances of their own funds and bank loans. In 2017, the amount of additional funds raised by A-share listed companies ranked seventh, showing the company's strong fund-raising ability.

According to Shen Wan Hongyuan research data, Luoyang Molybdenum Industry has a complete industrial chain from Mo mining, mineral processing, roasting, Mo chemical industry to Mo metal processing upstream and downstream. At present, the company has three world-class mines:

The main results are as follows: (1) the Sandaozhuang Mo-W deposit in Luanchuan, which is currently in operation, is a part of the Luanchuan Mo Orefield, which is the largest primary Mo ore field in the world, and is also the second largest scheelite deposit in China.

(2) the Shangfanggou Molybdenum Mine in Luanchuan, which is owned by Fuchuan Mining Company of the joint venture company, is close to the Sandaozhuang Mo-W deposit and is another super large primary Mo deposit belonging to the Luanchuan Mo Orefield.

(3) the holding subsidiary of the company owns the mining right of the East Gobi Molybdenum Mine in Hami City, Xinjiang, which is a super large and high quality molybdenum mine discovered in recent years. Sandaozhuang mine is being exploited, Shangfanggou mine and Donggobi mine are still undeveloped.

At present, the company has Mo metal reserves of 552000 tons, tungsten metal reserves of 320700 tons. Sandaozhuang Mo concentrate adopts open pit mining, the annual output is maintained at about 15000 tons, and the annual output of tungsten concentrate is maintained at about 11000 tons. In 2017, the output of molybdenum was 16717 tons and the output of tungsten was 11744 tons. In the first half of 2018, the company achieved 7957 tons of Mo production, 5691 tons of tungsten production (excluding Yulu Mining), 13500 to 14900 tons of Mo and 11000 to 12000 tons of tungsten in 2018.

An overview of the reserves and resources of the company's three world-class mines:

Copper business: the overall strength ranks among the top three in the country

According to Zhongyuan Securities, the main control of the global copper industry is in the hands of foreign mining giants. From a mineral point of view, there are only five companies with an annual production capacity of more than 1 million tons, namely, Chile's state-owned, Freeport, Glencore, BHP Billiton and the Mexican Group.

Chinese companies are also emerging through acquisitions of overseas mines. Minmetals acquired the Las Bonbus (Las Bambas) copper mine in Peru in 2014 and produced 454000 tons of copper in 2017. Zijin acquired 49.5 per cent of Camoa Holdings and shareholder loans in 2016 for a 95 per cent stake in Camoa Copper. Zijin produced 208000 tons of copper in 2017 and, according to the expansion plan, will reach 400,000 tons per year by 2019.

Top 10 foreign companies in copper production in 2016:

Comparison of copper reserves and output of domestic mining companies:

In 2017, Jiangxi Copper, an established copper company, produced 210000 tons of copper. In 2017, Luoyang Molybdenum produced a total of 284000 tons of copper in the mines of Tenke in the Democratic Republic of the Congo and NPM in Australia. The overall strength of the company in the copper industry ranks among the top three in the country.

Teken Mine location:

Cobalt Business: the second largest Cobalt producer in the World

The upstream resources of cobalt deposits in the world are mainly controlled by several multinational mining companies, such as Glencore, Luoyang Molybdenum Industry and Eurasian Resources. Glencore, Luoyang Molybdenum Industry and Eurasian Resources mining companies accounted for more than 40% of the global cobalt ore production in 2017. According to Zhongyuan Securities, Glencore's total output in 2017 was 27400 tons, accounting for 23 percent. Luoyang Molybdenum became the world's second largest cobalt producer after completing its acquisition of the Tenke mine in 2016, with an annual output of 16000 tons in 2017. Eurasian resource production capacity is mainly concentrated in Boss Mining, production of about 6800 tons in 2017. If Luoyang Molybdenum Industry expands the production of Tenke project according to the plan, the company's cobalt production capacity will be further increased to 20, 000 tons, and the company's voice and competitive advantage in the cobalt industry will be further strengthened.

Forecast of Global Cobalt production (Metallic tonnage)

Progress of Chinese enterprises' cobalt projects in the Democratic Republic of the Congo in 2018:

Niobium and phosphorus business: jump to the second largest in the world

In October 2016, Luoyang Molybdenum acquired 100 per cent of Anglo American's AANB (niobium business) and AAFB (phosphorus business) shareholders in Brazil through its Hong Kong subsidiary CMOC Limited for US $1.5 billion in cash. The second largest niobium ore resource in the world and the highest grade P205 resource in Brazil have been obtained.

AAFB's two phosphate plants are located in the agricultural heartland of Brazil:

Zijin Mining Koluweizi Project: the mines under AANB and AAFB are rich in reserves:

On April 14, 2017, the company held its first interim general meeting of 2017 to consider and approve the proposal to request the board of directors to authorize the board of directors to have full power to deal with the investment in the Tenke Fungurume mining area between the company and BHR and its shareholders or upper-class investors. Motion on matters ", The general meeting of the company authorizes the board of directors to have full power to deal with TFM project cooperation (as defined in part V of this announcement). Luo Mo Holdings, a wholly owned subsidiary of the Company in Hong Kong, signed the share transfer Agreement with BHR, BHRDRC (BHRDRC and Luo Mo Holdings and BHR (hereinafter referred to as "the parties") on January 18, 2019. The company intends to acquire an indirect interest in BHR DRC100% M24 per cent held by BHR through BHR DRC through the purchase of its shares in BHR DRC100% from BHR through Lomo Holdings. The price of the deal is $1135993578.71.

As an international leader in resource diversification, Luoyang Molybdenum Industry is currently the second largest cobalt and niobium ore in the world, the fifth largest molybdate and tungsten ore in the world, the second largest copper ore enterprise in China, and the second largest phosphate fertilizer producer in Brazil. The main products include copper, cobalt, tungsten, molybdenum, niobium, phosphorus, gold. The main way for the company to expand is to buy mine resources at a low price in the cyclical industry, and the acquisition of TFM at the low price of copper and cobalt and the acquisition of AANB and AAFB, at the low price of niobium and phosphorus have brought good returns to the company. At the same time, Luoyang Mo industry will also enhance the voice and control of the mine.

Source & Special thanks:

Luoyang Molybdenum Industry: "2018 half Annual report of Luoyang Luanchuan Molybdenum Industry Group Co., Ltd."

Shen WanHongyuan research: "the international leader of resource diversification," Cash Mine ", covers for the first time and gives an increased rating."

Zhongyuan Securities: "layout of overseas High-quality Resources and consolidate the strength of Mining Integration"