Zijin Mining Expands Domestic Ore Layout, Plans to Acquire Control of Zangge Mining for 13.7 Billion Yuan

On January 16, the first merger and acquisition deal of 2025 in the A-share market, which attracted significant market attention, was finalized. Zijin Mining announced that it plans to acquire a 24.82% stake in Zangge Mining for a total of 13.729 billion yuan at 35 yuan per share through its wholly-owned subsidiary, Zijin International Holdings. Combined with its previously held shares, Zijin Mining's total shareholding will reach 25%. With the arrangement of the corporate governance structure, Zijin Mining will gain control of Zangge Mining and consolidate its financial statements.

Facing intense geopolitical challenges, Zijin Mining, which has entered the ranks of global leading metal mining companies, has been continuously strengthening its domestic strategic mineral layout in recent years. Zangge Mining owns high-quality copper, lithium, and potassium resources in Tibet and Qinghai. With the completion of this acquisition, Zijin Mining will significantly enhance its copper and lithium resource reserves, add strategic potassium resources, achieve absolute control over the Julong Copper Mine, and further expand the "Zijin system" capital map.

First Acquisition of

Control Over an A-Share Mining Listed Company

This billion-yuan-level investment marks Zijin Mining's largest single investment to date. It is also the second time Zijin Mining has acquired control of an A-share listed company after taking control of Longking Environmental Protection, and the first time it has acquired control of an A-share mining listed company.

This acquisition aligns with the policy direction of the "Opinions on Deepening the Market Reform of Mergers and Acquisitions of Listed Companies" issued by the China Securities Regulatory Commission, which encourages leading listed companies to focus on their core businesses and conduct intra-industry mergers and acquisitions between listed companies under different control. It facilitates the integration of high-quality resources and enhances the investment value of both Zijin Mining and Zangge Mining.

Zangge Mining, a Shenzhen Stock Exchange-listed company, has focused on Tibet and Qinghai. Through years of continuous mergers and acquisitions, it has formed three major business segments: potassium, lithium, and copper. Its core assets include 100% mining rights over 724.35 square kilometers east of the Qarhan Salt Lake Railway in Qinghai (currently undergoing mining license renewal), 70% equity in the Vientiane Baan-Oum Potash Project and the Setthathirath Potash Project in Laos, 24.01% equity in the Mami Tso Salt Lake in Tibet, 21.09% equity in the Longmu Tso Salt Lake and Jieze Chaka Salt Lake in Tibet, and 30.78% equity in the Julong Copper Mine in Tibet.

On January 9, Zangge Mining announced that its controlling shareholder and second-largest shareholder were planning a share transfer, with Zijin Mining as the counterparty.

On January 16, this highly anticipated billion-yuan-level acquisition was finalized. Zijin International Holdings signed a control transfer agreement with Zangge Venture Capital and Xinsha Hongyun. Upon completion of the transaction, Zijin Mining will gain a majority of board voting rights, acquire control of Zangge Mining, and consolidate its financial statements.

To effectively address geopolitical risks, Zijin Mining has, in recent years, increased its investment in domestic and neighboring resources while adhering to its globalization strategy. Industry insiders believe that through this acquisition, Zijin Mining has secured a batch of high-quality mineral resources, showcasing its strong capital strength and merger and acquisition capabilities.

Tibet is a core region for Zijin Mining's domestic resource layout. In addition to the Julong Copper Mine, the company is the second-largest shareholder of the Yulong Copper Mine and leads the construction and operation of the Juno Copper Mine, Xiong Village Copper Mine, and Lakkor Tso Lithium Salt Lake. Upon completion of this transaction, Zijin Mining's strength in the Tibet segment will be further enhanced.

Absolute Control Over the World-Class Julong Copper Mine

The first collaboration between Zijin Mining and Zangge Mining originated from the Julong Copper Mine in Tibet. The successful development of this project achieved a win-win outcome, laying a solid foundation for deep cooperation between the two parties.

At that time, Zangge Mining held the Julong Copper Mine, the largest world-class copper mine in China, but faced development difficulties due to various factors despite significant investment. In June 2020, Zijin Mining took control of the Julong Copper Mine and led its production and operation. Within just 18 months, the first phase of the project was completed and put into operation. Copper production reached 115,000 mt, 154,000 mt, and 166,000 mt in 2022, 2023, and 2024, respectively, setting a new benchmark for high-altitude mining.

As the second-largest shareholder of the Julong Copper Mine, Zangge Mining has enjoyed substantial investment returns with the mine's success. The Julong Copper Mine contributed the majority of Zangge Mining's profits and became its "ballast stone" against industry cycle downturns in recent years. Specifically, it generated investment returns of 720 million yuan and 1.3 billion yuan in 2022 and 2023, respectively, and approximately 1.36 billion yuan in the first three quarters of 2024.

In 2024, the Julong Copper Mine added 14.726 million mt of newly filed copper resources, bringing its total copper resources to 25.88 million mt with an average grade of 0.29%. It is currently the copper mine with the largest filed resource volume in China. The ongoing Phase II expansion project, with a capacity of 200,000 mt/day, is expected to commence production by the end of 2025, increasing annual copper production to 300,000-350,000 mt. The Phase III project is also under simultaneous research, and if approved and constructed, the Julong Copper Mine will achieve an annual copper production capacity of 600,000 mt, ranking among the world's top copper mines.

After gaining absolute control of Zangge Mining, Zijin Mining is expected to enhance the operational efficiency of the Julong Copper Mine and accelerate the construction of its Phase II and Phase III projects.

According to Zijin Mining's new five-year plan released in 2023, the company plans to achieve annual production of 1.5-1.6 million mt of mined copper, 100-110 mt of mined gold, and 250,000-300,000 mt of lithium carbonate equivalent by 2028. With its current resource reserves and capacity, Zijin Mining is well-positioned to achieve this ambitious goal.

Deepening Strategic Synergy in the Lithium Segment

Leveraging lithium resources in the Qarhan Salt Lake, Zangge Mining has developed lithium carbonate resources and currently has a battery-grade lithium carbonate capacity of 10,000 mt/year. Zangge Mining's future lithium growth will primarily come from three salt lakes in Tibet: the Mami Tso Salt Lake (planned capacity of 100,000 mt/year), the Longmu Tso Salt Lake (planned capacity of 70,000 mt/year), and the Jieze Chaka Salt Lake (planned capacity of 60,000 mt/year of lithium chemicals). These three salt lakes have abundant resources, with lithium carbonate equivalent reserves of 2.18 million mt, 1.89 million mt, and 2.01 million mt, respectively. The Mami Tso Salt Lake, under construction, is adjacent to Zijin Mining's Lakkor Tso Salt Lake and has extremely high lithium concentrations, offering promising economic benefits due to its low-cost advantages.

Zangge Mining's management team is highly professional, with extensive experience in salt lake development and low-cost lithium extraction from salt lakes. Through continuous innovation, they have overcome global challenges in extracting lithium from brine with ultra-high lithium-magnesium ratios and ultra-low concentrations, achieving a lithium recovery rate of over 95%. They have also developed a world-leading "one-step" lithium precipitation process, capable of directly producing battery-grade lithium carbonate.

Zijin Mining possesses world-class lithium resources in its "two lakes and two mines" portfolio. The company plans to achieve a lithium carbonate equivalent production of 250,000-300,000 mt by 2028. Combined with Zangge Mining's future production, Zijin Mining is expected to become one of the world's most important lithium producers. Zijin Mining will fully leverage Zangge Mining's experience in salt lake development and low-cost lithium extraction technology to achieve efficient synergy in their salt lake projects in Tibet.

In its announcement, Zijin Mining committed to addressing potential competition in the lithium business between the two companies following the acquisition. Zijin Mining plans to steadily advance the integration of related businesses within 60 months of gaining control of Zangge Mining, prioritizing Zangge Mining for opportunities related to lithium and potash businesses.

In the potassium segment, China, as a major agricultural country, has the world's highest demand for potash fertilizer. However, like many other mineral resources, its external dependency has long exceeded 50%. Zangge Mining originated from potassium resource development and has over 1 billion mt of potassium chloride resources, making it the second-largest potassium chloride producer in China. In recent years, its actual capacity has been approximately 1.1 million mt/year. Future growth in the potassium segment will primarily come from the planned 2 million mt/year capacity of the Laos Potash Project. This will add strategic potassium resource reserves to Zijin Mining.

Zangge Mining boasts abundant and high-quality mineral resources. Zijin Mining will leverage its full-process independent technology and large-scale system engineering R&D and implementation capabilities, combined with the industry's leading cost control levels of both companies, to accelerate the potential release of Zangge Mining's potassium and lithium resources, transforming resource advantages into economic benefits.

This acquisition will add a high-quality listed company to Zijin Mining, further expanding the "Zijin system" capital map. Zangge Mining has a low asset-liability ratio, and after the acquisition, Zijin Mining's consolidated financial statements will reflect a further decline in the asset-liability ratio.