Jiangxi Copper posts drop in annual profit, eyes higher 2021 output

Revenues jumped 32.5% to 318.56 billion yuan as copper prices recovered from an initial coronavirus-driven collapse to gain more than 25% last year on resurgent demand in China, the world’s largest metals consumer.

However, Jiangxi Copper – an integrated producer controlling mines and smelters – recorded 855.31 million yuan ($130.36 million) in impairment charges in 2020, including 418.13 million yuan related to its closure of subsidiary Dongtong Mining Co and another 357.74 million yuan on inventories.

The company’s inventories of copper cathodes – a basic form of copper used to make rods and wire – fell 95.65% to just 12,200 tonnes by the end of last year.

Cathode production rose 5.5% year-on-year to 1.64 million tonnes in 2020, just below the 1.65 million tonnes target, and Jiangxi Copper aims to boost output by another 5.3% to 1.73 million tonnes in 2021.

It is also targeting a 22.2% jump in gold output to 96 tonnes, while keeping copper concentrate production flat at 208,900 tonnes.

Noting that benchmark treatment and refining charges (TC/RCs) for 2021 – a key source of smelter revenue – are the lowest in 11 years, Jiangxi Copper said there was still “relatively big uncertainty” over any improvement in copper mine supply that would see charges increase.

The company sources around 80% of its copper concentrate needs from overseas, with 70% of that supply bought on a long- term basis and the remainder on spot.

($1 = 6.5609 Chinese yuan renminbi)

(By Tom Daly; Editing by Steve Orlofsky)