On the evening of January 30, 2019, Zhuzhou Metallurgical Group released a forecast of its annual results for 2018, which is expected to achieve a net profit of-1.63 billion yuan for shareholders of listed companies in 2018 and a net profit of 55.45 million yuan in 2017.

1. Main business impact

According to the General Office of the State Council "guidance on promoting the relocation and Transformation of Old Industrial areas in Urban areas" (No. 9 of the State Office (2014) and the requirements of the local provincial and municipal governments, the Qingshuitang production system of Zhuzhou City, Hunan Province, where the company is located, was shut down at the end of the year. The production capacity gradually withdrew, the output of lead products decreased by 20% compared with the same period last year, the output of zinc products decreased by 17% compared with the same period last year, and the cost of lead and zinc products increased significantly compared with the previous year.

2. The impact of non-operating profit and loss

At the end of the year, the company shut down and withdrew from the Qingshuitang smelting capacity due to the lack of government compensation, resulting in a loss of 1.36816 billion yuan in impairment of fixed assets.

It is understood that the Qingshuitang Old Industrial Zone is a key industrial base built by the state during the first five-year Plan and the second five-year Plan period. After more than 60 years of development, it has formed an industrial pattern dominated by smelting and chemical industry. During the peak period, 261 enterprises, such as Zhuzhou smelting Group and Zhongyan Zhuzhou Chemical Group, collected more than 48 billion yuan in profits and taxes, which made important contributions to the industrial revitalization of New China and the economic and social development of Hunan Province and Zhuzhou City. However, the extensive development model of "high consumption, high emission and high pollution" followed for a long time in the old industrial area has brought serious pollution to the city. Zhuzhou was listed as the "top ten air pollution cities in China" for two consecutive years in 2003 and 2004. There is a strong response from the public, and the drinking water safety of 10 million residents in the middle and lower reaches of the Xiangjiang River is also seriously threatened.

On October 16, 2018, Zhuzhou Metallurgical Group received 200 million yuan of special financial funds issued by Zhuzhou Municipal Finance Bureau for the withdrawal of Qingshuitang production capacity. On December 13, 2018, Zhuzhou Metallurgical Group said that the central government subsidy fund of 21.24 million yuan allocated by China Minmetals Group, the actual controller of the company, was specially used to subsidize the diversion and resettlement expenses of the company's staff and workers. On December 28, 2018, Zhuzhou Metallurgical Group said that in accordance with the requirements of the state and provincial and municipal governments, the company shut down the smelting capacity in the Qingshuitang production area and was carrying out clean-up work.

On December 30, 2018, the direct lead smelting Keefset furnace, which had been burning for five years, stopped working. Zhuzhou smelting Group Co., Ltd., which belongs to China Minmetals Group, also shut down its smelting capacity in Qingshuitang area of Zhuzhou City after 63 years of operation.

In addition, looking at the relevant data, we can see that the company's main business has been in a state of loss for a long time. In the 10 years from 2009 to 2018, the company's non-net profit deducted for seven years was negative, of which the non-net profit deducted for six consecutive years from 2010 to 2015 was negative, and the non-net profit deducted in 2015was-716 million yuan. It is the largest loss of the company since it went public. The company forecasts that non-net profit will be deducted from-800m yuan to-1.1 billion yuan in 2018, which means that the company's loss will reach an all-time high.