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Source: JIANGXI COPPER official website
Reporter: Zhang Bei, Huang Zhinan, Shenzhen Report
The upward cycle of metals has not masked the fluctuations in financial structure; the test is no longer the cycle, but the quality of operations.
On April 13, JIANGXI COPPER (600362.SH) held its 2025 annual performance briefing. In 2025, when both Shanghai copper and London copper reached historical highs, this domestic copper industry leader delivered a controversial annual report.
The financial report shows that for the first time since its listing, it recorded a net outflow of cash from operating activities of 6.914 billion yuan, with derivative financial liabilities surging 11 times year-on-year, and losses from fair value changes and investment income totaling nearly 4.9 billion yuan, directly consuming nearly half of its operating profit; inventory increased by 52% year-on-year to 68.19 billion yuan, with inventory alone consuming over 23.3 billion yuan of operating cash flow.
At the same time, JIANGXI COPPER has just completed its acquisition of SolGold, spending about 8 billion yuan to secure the Cascabel global top copper mine project in Ecuador, continuing to ramp up its overseas resource expansion efforts.
During the performance meeting, investors repeatedly questioned the management about core issues such as the short-term nature of the debt structure, the reasonableness of hedging losses, cash flow pressure, and inventory impairment risks. Although the management responded one by one, they failed to completely dispel market concerns about the profitability quality and risk control boundaries behind its aggressive expansion.
Aggressive Expansion
In 1997, China's non-ferrous metal industry stood at the crossroads of marketization and globalization.
At that time, domestic copper mine resources were inherently insufficient, high-grade mines were scarce, and there was a significant gap in smelting technology compared to international giants. As China's industrialization accelerated, the demand for copper, known as the &#34;industrial metal,&#34; was rising at a double-digit rate annually.
More critically, domestic mining companies generally faced a lack of funds and outdated governance structures. To break through development bottlenecks, they had to turn to the global capital market.
JIANGXI COPPER became the &#34;pioneer.&#34; In January 1997, JIANGXI COPPER Co., Ltd. was officially established, and just six months later, it was listed simultaneously on the Hong Kong Stock Exchange and the London Stock Exchange, raising over 1.6 billion Hong Kong dollars, becoming the first model of overseas listing for Chinese mining companies.
This listing not only brought critical funds for JIANGXI COPPER to expand mines and upgrade smelting equipment but, more importantly, it injected the rules of the international capital market, governance standards, and risk management systems into the veins of this traditional state-owned enterprise.
At the time of its listing, JIANGXI COPPER's core assets included only a few main mines such as the Dexing Copper Mine, with an annual production capacity of less than 200,000 tons of cathode copper; whereas by 2025, 28 years later, its annual production capacity of cathode copper had surpassed 2.3 million tons, with gold production exceeding 118 tons and silver production reaching nearly 1,400 tons, becoming the leader among domestic copper smelting enterprises
From its inception as a &#34;pathfinder&#34; to becoming the &#34;big brother&#34; of the industry, Jiangxi Copper's 28 years have always synchronized with China's industrialization process and coexisted with the cyclical tides of commodities.
The year 2025 is expected to be a prosperous year for the global non-ferrous metals industry. Supported by both new energy and traditional industrial demand, copper prices in Shanghai and London are expected to rise throughout the year, both reaching historical highs.
For Jiangxi Copper, which holds mining resources and smelting capacity, this should have been a golden cycle for performance realization. However, it has chosen a more aggressive expansion path, betting on the expansion of the global resource map and increasing upstream inventory in the industrial chain.
At the end of last year, through its wholly-owned subsidiary Jiangxi Copper (Hong Kong) Investment Co., Ltd., it made a formal offer to acquire all issued shares of SolGold at a cash price of 28 pence per share. This transaction is set to be finalized in March 2026, successfully securing the Cascabel project, a top global copper mine in Ecuador.
This is not Jiangxi Copper's first overseas venture; it has previously become the largest strategic shareholder of Canadian mining giant First Quantum and actively promoted cooperation in resource development. In the Central Asian market, after the successful production of the Bakuta tungsten mine in Kazakhstan, the company acquired local exploration rights, clearly designating Kazakhstan as an important target area for overseas resource acquisition.
Zhou Shaobing, Vice Chairman and General Manager of Jiangxi Copper, stated at the performance meeting that the company will focus on the development goal of &#34;focusing on the main business and prioritizing resources&#34; and will coordinate the planning and construction of overseas projects.
Alongside the overseas resource expansion, the company has significantly increased its inventory in response to high copper prices. Financial reports indicate that by the end of 2025, Jiangxi Copper's inventory book value reached 68.188 billion yuan, a substantial increase of 52.28% compared to 44.777 billion yuan at the end of 2024, marking a historical high since its listing.
From the cash flow statement, the increase in inventory in 2025 led to a cash outflow of over 23.4 billion yuan, which is the core reason for the shift of operating cash flow from positive to negative.
Regarding the substantial increase in inventory, Tu Dongyang, Deputy General Manager and Board Secretary of Jiangxi Copper, told reporters from the China Times that the company's inventory is dynamically updated, with the primary goal of meeting normal operational needs.
At the same time, the market is highly concerned about the global copper supply and demand pattern in 2026 and Jiangxi Copper's inventory scale. According to CICC's estimates, in 2026, the growth rate of global refined copper supply will converge towards the growth rate of mine supply, with a year-on-year growth rate of 1.9%. The expanding benchmark supply gap for copper mines will call for more price mechanisms to intervene.
If copper prices maintain a high level of prosperity, the company's large inventory is expected to smoothly convert into operating profits through product sales. Conversely, if copper prices do not meet market expectations, Jiangxi Copper will face dual risks of increased inventory impairment provisions and continued pressure on operating cash flow due to the nearly 6.82 billion yuan inventory formed in the historical high price range.
According to observations by this reporter, financial report data also shows that during the period, it recognized an inventory impairment loss of 103 million yuan, which, although significantly reduced from 659 million yuan in 2024, will quickly manifest as inventory impairment pressure once copper prices enter a downward channel
What is more concerning is that aggressive stocking and expansion have directly triggered an extreme adjustment in the debt structure of JIANGXI COPPER. The financial report shows that by the end of 2025, the company's long-term loan balance was 6.639 billion yuan, a decline from 14.92 billion yuan at the end of 2024, with the nearly halved long-term financing scale contrasting sharply with the surging short-term debt.
During the period, its short-term loan balance skyrocketed from 44.828 billion yuan the previous year to 55.823 billion yuan, combined with 9.194 billion yuan of long-term loans due within a year, the company's short-term interest-bearing debt scale has exceeded 65 billion yuan.
Correspondingly, JIANGXI COPPER's cash and cash equivalents at the end of the period were only 14.959 billion yuan, with a cash-to-short-term debt ratio of less than 0.6, and the quick ratio hit a new low in 16 years.
In response to market doubts about the short-term nature of the debt structure, Zhou Shaobing clearly stated to the &#34;Huaxia Times&#34; reporter that the increase in short-term liabilities was mainly due to increased stocking demand driven by the rising copper price trend, and there were no obstacles to long-term financing channels.
Hedging Losses
In the upward cycle of the industry in 2025, JIANGXI COPPER's performance showed an extremely fragmented state.
While the main business profits reached a new high, the final net profit attributable to shareholders was nearly stagnant, with huge losses from financial instruments becoming the core drag and the most controversial focus during the entire performance briefing.
According to the financial report, in 2025, it achieved operating revenue of 544.623 billion yuan, a year-on-year increase of 5.42%; the net profit attributable to shareholders after deducting non-recurring gains and losses increased significantly by 11.3% year-on-year, with main business profits reaching a historical high; however, the net profit attributable to shareholders was only 7.130 billion yuan, a slight increase of 2.41% year-on-year, with the growth rate far below that of the net profit after deducting non-recurring gains and losses, and lagging behind the level of industry peers.
From the reporter's observation, the huge gap between its net profit and net profit after deducting non-recurring gains and losses comes from the massive losses in financial instruments. The financial report shows that in 2025, JIANGXI COPPER's fair value change income was -2.514 billion yuan, and investment income was -2.412 billion yuan, with the total loss reaching 4.926 billion yuan, nearly swallowing up nearly half of the annual operating profit.
Alongside the losses, its derivative financial liabilities surged. By the end of 2025, its derivative financial liabilities reached 7.673 billion yuan, a year-on-year increase of over 11 times compared to 637 million yuan at the end of 2024, reaching a historical peak since its listing.
The market generally questions that in a period of unilateral rising copper prices, normal hedging operations would only hedge against the increase in the spot market and would not result in excessive losses far exceeding hedging needs. Whether the related losses come from directional speculative operations beyond the scope of hedging, and whether there are significant loopholes in JIANGXI COPPER's hedging risk control system.
In response, JIANGXI COPPER's Chief Financial Officer and Executive Director Yu Minxin stated to the reporter that the company strictly conducts hedging work cautiously according to risk control requirements. When copper prices rise, the spot reflects profits while futures reflect losses, which is a normal phenomenon, and there are no losses after spot and futures hedging
Yu Minxin further pointed out: &#34;The company's hedging transactions are solely aimed at hedging the price risks present in spot market transactions, and any speculative trading is prohibited to ensure the stability of the company's profits.&#34;
Zhou Shaobing also reiterated at the earnings meeting that the company adopts a prudent hedging strategy, and there will be no losses after the futures-spot hedging.
However, the details of the hedging disclosed in the financial report show a significant contrast to the management's statements.
The financial report indicates that in 2025, the fair value hedging conducted resulted in a fair value change gain of 4.015 billion yuan for the hedged items, while the derivative financial assets formed by the hedging instruments amounted to only 63,900 yuan, and the derivative financial liabilities reached as high as 4.355 billion yuan. The gains and losses of the hedging instruments and the hedged items did not achieve complete hedging, and the ineffective hedging portion was directly included in the current profit and loss.
More concerning than the hedging losses for the market is the divergence between the company's profits and cash flow. In 2025, the company achieved a net profit attributable to shareholders of 7.13 billion yuan, but the net cash flow from operating activities was -6.914 billion yuan. This marks the first net outflow of operating cash flow since 2010, with a single-quarter net outflow of operating cash flow exceeding 13 billion yuan in the fourth quarter of 2025, completely diverging from the new highs in copper prices and the cyclical characteristics of the industry's upturn.
Tu Dongyang explained to reporters from the China Times that the net outflow of operating cash flow in 2025 was mainly due to increased inventory funding caused by rising metal prices. The financial report shows that in 2025, the company's operating receivables increased by 7.537 billion yuan compared to the previous year, while operating payables only increased by 4.442 billion yuan, further exacerbating the cash flow pressure due to the gap between receivables and payables.
At the same time, changes in policies have also added uncertainty to the company's future profitability. Regarding the sulfuric acid export ban that will be implemented starting in May 2026, Yu Minxin stated to participating investors that fluctuations in sulfuric acid prices have a direct impact on the profits of the company's chemical products, and the company plans to produce 6.51 million tons of sulfuric acid in 2026.
Public information shows that sulfuric acid is a major byproduct of copper smelting. After the implementation of the domestic sulfuric acid export ban, the surplus production capacity in the domestic market will intensify price competition, and the profitability of Jiangxi Copper's sulfuric acid business will face direct compression risks.
On one hand, the company is investing heavily to secure top global copper mine resources, continuously moving towards the goal of becoming an international first-class mining giant; on the other hand, the accumulation of operational risks brought about by significant hedging losses, deteriorating cash flow, and a short-term debt structure has led Jiangxi Copper to follow a path of expansion and loss of control during the copper price bull market in 2025.
For this domestic copper industry leader, how to maintain risk control boundaries while expanding globally and restore the quality of profits and the cash-generating ability of its main business will be the core issue that cannot be avoided in 2026

600362

00358

560860

Jiangxi Copper disclosed at the 2025 annual performance briefing that despite the upward metal cycle, its financial condition has shown volatility, with a net cash outflow from operating activities of 6.914 billion yuan, a surge in derivative financial liabilities by 11 times, and a loss of nearly 4.9 billion yuan. The company has just acquired the Cascabel copper mine in Ecuador for approximately 8 billion yuan, accelerating its expansion pace. Investors have raised concerns about its debt structure, cash flow, and inventory risks, and the management's response has failed to alleviate market worries

腾讯新闻 - 财经

JCCL

JIANGXI COPPER

Wanjia CSI Industry Non-Ferrous Metal Theme ETF

Guotai CSI Non-Ferrous Metal Kuangye Theme ETF

Penghua Guozheng Non-ferrous Metal Industry ETF

China Southern CSI SWS Non-Ferrous Metal ETF

GF CSI Rare Metals Theme ETF

ChinaAMC CSI Subdivision Non-ferrous Metal Sub-Industry ETF

Guotai CSI Non-ferrous Metal ETF

Dacheng Non-Ferrous Metal Futures ETF

Hwabao WP CSI Non-ferrous Metal ETF

Yinhua CSI Non-ferrous Metal ETF

SolGold Plc

Acquiring a top global copper mine for 8 billion yuan, but suffering a huge loss of 4.9 billion yuan in hedging! JIANGXI COPPER's expansion and loss of control in 2025 ｜ Financial Report Anomaly Perspective