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China Daye Non-Ferrous Metals Mining Ltd., 00661.HK - Company Profile
Chairman	Wang Yan
Share Issued (share)	17,896,000,000
Par Currency	Hong Kong Dollar
Par Value	0.05
Industry	Nonferrous Metal
Corporate Profile	Business Summary: The Group is principally involved in mining and processing of mineral ores and trading of metal products. Performance for the year: Revenue for the year ended 31 December 2020 amounted to approximately RMB29,387,562,000 (2019: RMB32,805,685,000), representing a year-on-year decrease of approximately 10.42%. Profit for the year was approximately RMB301,636,000 (2019: RMB173,548,000), representing a yearon-year increase of approximately 73.81%. For the year ended 31 December 2020, basic earnings per share amounted to RMB1.71 fen (2019: RMB0.82 fen). Business Review In 2020, the Group produced a total of approximately 25,100 tonnes of mined copper, a decrease of approximately 14.77% over the same period last year; approximately 510,000 tonnes of copper cathode, a decrease of approximately 4.33% over the same period last year; approximately 900.09 tonnes of precious metals (including approximately 5.81 tonnes of gold, approximately 856.45 tonnes of silver, approximately 17.40 kg of platinum, approximately 211.00 kg of palladium and approximately 37.60 tonnes of tellurium), a decrease of approximately 29.30% over the same period last year; approximately 1,098,500 tonnes of chemical products such as sulphuric acid (including approximately 1,095,700 tonnes of sulphuric acid, approximately 500.45 tonnes of nickel sulphate, approximately 2,176.35 tonnes of copper sulfate and approximately 157.82 tonnes of crude selenium), a decrease of approximately 6.77% over the same period last year; approximately 182,800 tonnes of iron concentrate, a decrease of approximately 18.43% over the same period last year; and approximately 66.51 tonnes of molybdenum concentrate, a decrease of approximately 14.80% over the same period last year. The year 2020 was extremely difficult and extraordinary. Simultaneously facing the pandemic of the century, unusual floods, and other shocking external challenges, mines being shut down and low-load production in the smelting system during the first quarter, the Group have received sound guidance and strong support. All staff of the Company were united with the goal to win the “three tough battles (三大硬仗)” of controlling the pandemic, overcoming flooding, and ensuring stable production. The Company pressed ahead with cost control, structural adjustment, further reforms, and major tasks such as a 400,000 tonne project. The followings are the Group’s main accomplishments: (I) Stabilising production and strengthening control, promoting management quality The Company re-adjusted the development strategy to stabilise production and coordinated to optimise the smelting and mine maintenance arrangements. The Group also balanced the internal and external operation priorities during the pandemic. The output of main products achieved the expected target in general by means of adjusting raw material procurement, solving bottlenecks limit, strengthening the Group’s foothold, and reserved power. The Group’s cost control was effective. Through the implementation of 23 measures in seven categories, the annual cash unit cost of major products and non-tax and other administrative expenses were reduced. Financial expenses also decreased through measures such as cutting down interest-bearing debts, acquiring preferential loans, and replacing existing high-cost loans and with low-cost finance. In addition, the Company applied for and was granted treatments of 17 preferential policies for reduction, exemption and deferral of payments on certain items. The combined recovery rate of copper, gold, and silver in smelting was better than planned, and recovery rates of platinum, palladium, selenium, and tellurium all met respective targets. (II) Strengthening the principal business, seeking new business opportunities and sustaining development of the foundation The Company tapped the potential of the principal business and improved its quality. The eighth furnace period of Ausmelt furnace in the smelting plant operated stably for 26 months, surpassing the Company’s target to upgrade twice in three years. The Ausmelt furnace’s lifespan, setting the world new record, far exceeded the industry’s general level. The key work of the Group’s mining business was steadily proceeded. The Tongshankou Mine’s open-pit southern boundary optimisation project completed a topsoil stripping volume that exceeds the planned amount, and the comprehensive utilisation of non-metal resources achieved good results. Tonglvshan Mine strived to improve mining methods, leading to a sharp rise in medium-deep hole mining output. Fengshan Mine started to process and reuse waste rock. The 400,000 tonne project was progressing well. While the project’s design was of high standard, construction was carried out with high efficiency. Without exceeding the original budget, the Company newly added 6 major sub-projects, including transportation corridors and electrolytic smart copper warehouses, reducing the cost of copper smelting per ton through self-initiated processes of optimisation. Upgrade and Renovation of the Deep Desulphurisation of Acid-Making Tail Gas Project of Smelting Plants The construction of the project is divided into two phases. In 2020, the sodium-alkali process was applied in desulfurization of acid-making tail gas in lieu of the hydrogen peroxide process. Ozone devices and electric mist eliminators were added to the desulfurization tower of acid-making tail gas. Upgrade and Renovation of the System of Fugitive Gas Desulphurization In 2020, the dynamic wave nozzles were applied in place of the rotary cutting nozzles of the desulfurization tower, with spray layers deployed to the interior of the tower. Anonline SO2 monitoring device was added to the inlet of the desulfurization system. Clean Production Project of Co-processing Multi-based Solid Waste of Ausmelt Furn In 2020, the Group completed improvement projects such as a new copper-containing environmentally friendly mud warehouse (using an old electrolytic III-system plant) and obtained a permit for handling hazardous waste. (III) Management quality enhanced by management and base strengthened The Company managed to improve the organisational structure and three system-reforms through streamlining the middle management and promoting professionalism. The Company continued to improve the corporate governance structure through the standardisation of governance, market-based business approach and flexibility of production. The Company continued to enhance the allocation of internal resources through optimisation of resources, rationalisation of factors of production and refining management. Currently, 11 reform plans have been issued and gradually implemented, injecting new impetus into the Company’s high-quality development. Work safety and environmental protection conditions are moderately improving, as reflected by the realisation of the “five zero (五為零)” goal and lower rates of minor accidents and injuries. The Company upgraded and transformed the smelting system and completed the task of reducing heavy metal emissions from its facilities in Hubei Province. The Company continued to strengthen financial risk prevention and control, regularly conducted situation tracking and risk investigation and carried out financial audit inspections, so that risk control has been effectively promoted as a normal practice. The Company also strengthened capital supervision and centralised management. Implementation “Measures on Seeking Accountability for Illegal Operation and Investment (《違規經營投資責任追究實施辦法》)” which set out procedures for seeking accountability was revised. Moreover, the “Interpretation Manual of Seeking Accountability for Illegal Operation and Investment (《違規經營投資責任追究制度解讀手冊》)” which deepened the employees’ awareness towards compliance operations was issued. The Company obtained fruitful achievements in technological innovations as 40 patents were obtained. 2 achievements of the Company won a number of provincial and ministeriallevel scientific and technological achievements awards, among which “Key Technology and Application of Coordinated Large-scale Disposal of Waste Circuit Boards in Copper Concentrate and Oxygen-enriched Smelting (銅精礦富氧頂吹熔煉協同規模處置廢電路板關鍵技術及應用)” won the first prize of China Nonferrous Metals Industry Science and Technology Award. “Key Technology and Application of Efficient recovery of rare and precious metals in the copper smelting process (銅冶煉過程中稀貴金屬高效回收關鍵技術創新與應用)” won the first prize of Hubei Science and Technology Progress Award. (IV) Anti-pandemic and flood prevention work During the most critical period of the pandemic, production of smelter plants was carefully organised to maintain the capacity utilisation rate of mined copper and cathode copper. The Group’s commerce department actively expanded sales channels and maintained sales of sulfuric acid. The Group’s logistics department tirelessly improved logistics to ensure smooth delivery of raw materials, chemicals and products. The Group’s mining department seized the opportunity of production suspension to actively carry out equipment maintenance, safety improvement work and personnel training so that the Company was able to resume mining and production earlier than others. When the main flood season approached, the Company actively responded to the government’s call and organised a rescue team within 24 hours to participate in the rescue of the Yangtze River levee. The Group built 1.2 kilometres of sub-dams, filled more than 50,000 bags of sandbags, and laid 6,000 square meters of protective layer for the initial base dam of the tailings reservoir. Moreover, the Group fixed two major pipings in time. Overall, the Group effectively protected the Yangtze River levee and ensured the safety of the tailing ponds along the river during the flood. Under the challenge to combat the pandemic, sustain production and fight flooding, the entire Company’s awareness of the holistic vision was raised and responsibility was actively taken on. During the most severe period of the pandemic, more than 4,000 employees stayed at their positions every day to ensure the continuous operation of the Company’s production. During the mission to flight flooding and protect the levee, officials and cadres stood by the Yangtze River levee 24 hours a day, inspiring the team’s tenacious determination. The Company actively responded to the call of the Group’s province to help farmers and revive the economy after the pandemic. Employees with outstanding performance during the pandemic prevention and control and the resumption of work and production were arranged to recuperate and living supplies to employees in need during the pandemic were distributed. At the same time, the Company actively supported the local anti-pandemic initiatives, flood relief construction and poverty alleviation programs. Also, the Company cleaned up medical wastes of the mobile clinics in Huangshi City and expressed concerns to more than 600 employees temporarily distressed due to the pandemic. As a result, the image of the Company was further improved. Prospects: The international situation is affected by the impact of the COVID-19 pandemic. Additionally, the Sino-US strategic competition has intensified, and the anti-globalisation sentiment has grown. Although the global economic growth is gradually showing a trend of recovery, the risks of sporadic conflicts and unrest have increased and win-win cooperation has shifted further to zerosum games. The global economic recovery will inevitably be long-term, uneven, and uncertain. As for the domestic situation, after decades of rapid development, China has entered into the middle and late stages of industrialisation. In general, China is at the key turning point of changing development strategy, optimising economic structure, and transforming growth momentum. However, poor domestic circulation inhibits the potential growth rate of its economy, hence there is a need to devote more time in return of opportunity. Concerning the situation of the industry, the dual constraints of resources and the environment, the pressure of rising costs, as well as the combined bottlenecks of the sustainability of momentum and the expansion of innovation all impose major challenges towards the current development of the non-ferrous industry. Moreover, the bottleneck in development is expected to remain in the industry for a considerable period. In this context, the non-ferrous metal industry needs to speed up transformation and upgrading, further the supply-side structural reforms and demand-side reforms, and improve the circulation smoothness of supply-demand matching. The evolution of new business modes has intensified. Industry resource integration, industrial layout optimisation, industrial chain extension, technological innovation, clean energy, smart manufacturing, and new infrastructure will speed up further. Quality improvement and innovation for the non-ferrous industry enterprises is ever more urgent. Regarding market supply and demand, due to various factors such as the continuously growing production capacity of the copper smelting industry, the limited increase of mined copper output of the world, and the global COVID-19 pandemic, the gap between supply and demand of copper raw materials has further widened. Market competition is extremely fierce, and resource supply is unstable. The current processing fee/refining fee for imported ore has fallen to a historical low, which is far below the average minimum processing fee of the smelting industry. While the domestic raw material price has risen simultaneously and the price of sulfuric acid remained low, the profit margins of smelting companies have further narrowed and profit outlook for the industry is gloomy. Nevertheless, China’s development is still in a period full of important strategic opportunities but there are new changes in both opportunities and challenges. The Group must firmly grasp development opportunities. First, the Group must grasp the business opportunities brought about by changes in the financial environment. In response to the expected recession caused by the new coronavirus pandemic, global central banks have injected large-scale liquidity into the market and the quantitative easing policy cycle will roll on, the US dollar index will show a weak trend, and the price of risky assets will rise sharply, which will have a significant positive impact on the nonferrous metals industry. The global real interest rate is at a historical low, which also brings medium and long-term upward momentum to rare and precious metals such as gold and silver. Second, the Group must seize the long-term policy opportunity for China’s economic growth. Although China’s economy has been affected by the pandemic, unilateralism, protectionism, hegemonism and other factors, the basic elements and fundamental conditions that support China’s economic stability and development remain stable. The development trend of promoting economic transformation with technological innovation is accelerating. According to the forecast of the Development Research Centre of the State Council of China, the average growth rate of China’s economy during the 14th Five-Year Plan period will reach 6.2%, once again the highest among major economies in the world. It can be said that the basic trend of China’s economic stability and long-term improvement has not changed, and a stable growing environment is bound to bring substantial space and opportunities for growth to enterprises. Third, the Group must hold on to the market opportunities brought about by the rapid development of emerging industries. Prospects of bulk non-ferrous metals such as copper, nickel, cobalt, rare metals and their related new materials which is closely related with the rapid development of new energy, information technology and other emerging industries are promising. Meanwhile, the rapid development of emerging strategic industries has brought new structural opportunities for sectors of related non-ferrous metals, especially the downstream high-end deep processing and new materials industries. Fourth, grasp the realistic opportunities brought about by the new development strategies of the Group and the Company. The Company has a solid foundation for development. In the next step, the Group will focus on expanding the scale of copper smelting, expanding mineral resources, developing a circular economy in the industry, and researching and developing new materials with rare and precious metals, which will provide more opportunities and support for the Company’s development.

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Public company info - China Daye Non-Ferrous Metals Mining Ltd. , 00661.HK