Copper prices soar, Luoyang Molybdenum's profits break 20 billion yuan for the first time, the counter-cyclical expansion and cash flow test behind the new profit high | Financial report anomaly perspective

Ask AI · How does cash flow pressure affect expansion pace?

This newspaper (chinatimes.net.cn) reporter Zhang Bei Huang Zhinan Shenzhen reports

On March 30, Luoyang Luanchuan Molybdenum Group Co., Ltd. (hereinafter referred to as “Luoyang Molybdenum”, 603993.SH, 03993.HK) held the 2025 annual performance release conference, disclosing this record-breaking annual report.

In 2025, it achieved operating revenue of 206.68B yuan, maintaining the two-thousand-billion-yuan milestone for two consecutive years; net profit attributable to parent company was 20.34B yuan, a significant increase of 50.30% year-on-year, setting a new performance high for five consecutive years; total assets first surpassed 200 billion yuan, reaching 77.71B yuan.

“In 2025, the company’s operating performance reached a new historical high, with total operating revenue of 206.7 billion yuan, roughly flat year-on-year. Among them, mining business revenue increased by 19% year-on-year, demonstrating the company’s sustained endogenous growth potential.” Board Secretary Xu Hui straightforwardly highlighted the core background of this achievement in the performance report.

During the strong cycle window of copper prices, Luoyang Molybdenum’s growth story is centered on copper.

Reconstruction of Profit Structure

Supported by strong copper prices, Luoyang Molybdenum’s performance entered a “cycle” phase. How to maintain profit growth amid resource price fluctuations will be its key task in the next stage.

The 2025 financial report shows that, despite a slight 2.98% decrease in revenue, Luoyang Molybdenum achieved a leap of 50.30% in net profit attributable to parent, thanks to a thorough reconstruction of its profit structure.

Regarding the driving force behind improved operating performance, Luoyang Molybdenum told the “Huaxia Times” reporter that mining revenue reached 55.1B yuan, accounting for 38% of total revenue, with “mining” volume increasing by about 7 percentage points compared to 2024. Among them, revenue from copper products was 741.1k yuan, accounting for 27% of total revenue and 71% of mining revenue. Both “copper” volume indicators increased by about 7 percentage points year-on-year.

Specifically, in 2025, Luoyang Molybdenum’s mining revenue grew by 19% year-on-year, with a gross profit margin of 52.85%, up 7.71 percentage points from the previous year; the copper segment was the main engine of performance growth.

In 2025, Luoyang Molybdenum’s copper production reached 741.1k tons, an increase of 13.99% year-on-year, ranking eighth among global copper producers, surpassing last year’s initial target of 640k tons, exceeding the goal by 15%.

Luoyang Molybdenum Chairman Liu Jianfeng stated at the performance meeting: “This is very rare among all major copper producers worldwide in 2025, or even unique.”

With both volume and price rising, the profitability scale of copper business has significantly increased. During the period, its copper business achieved revenue of 640k yuan, up 31.63% year-on-year, with gross profit margin rising by 4.9 percentage points to 55.16%; from the profit structure perspective, copper revenue accounted for nearly 71% of total mineral product revenue, contributing 74% to gross profit, making it an undisputed performance pillar.

In interviews, “beyond expectations” was a key phrase for its 2025 fiscal year. Record-breaking niobium production reached 10.3k tons, with a completion rate of 103%; phosphate fertilizer output was 1.2135 million tons, 106% completion; cobalt production was 117.5k tons, 107% completion; molybdenum production was 13.9k tons, 103% completion; tungsten production was 7.1k tons, 102% completion.

Additionally, Luoyang Molybdenum achieved physical trade volume of 4.71 million tons, with a completion rate of 111%; under the International Accounting Standards (IXM), gross profit margin was 2.11%, a recent high.

According to the reporter’s observation, besides copper, the rising prices and cost optimization of other minerals jointly boosted Luoyang Molybdenum’s overall profitability.

In 2025, the average price of MB cobalt increased by 42.81% year-on-year, the domestic ammonium paratungstate price increased by 57.41%, molybdenum-iron, niobium-iron, and ammonium phosphate prices all rose to varying degrees. Despite a 53.06% decline in cobalt product sales due to the impact of the Democratic Republic of Congo’s export quota policy, the gross profit margin of cobalt business still increased significantly by 29.31 percentage points to 63.62% thanks to price increases and cost control; molybdenum, tungsten, niobium, and phosphate businesses also improved their beneficiation recovery rates through process optimization, with gross profit margins rising by 4.58, 1.26, and 6.98 percentage points respectively.

A significant cost optimization further expanded Luoyang Molybdenum’s profit space. The financial report shows that in 2025, operating costs were 55.1B yuan, a sharp decrease of 11.56% year-on-year, far exceeding the revenue decline; financial expenses decreased by 82.19% year-on-year, from 10.3k yuan last year to 513 million yuan.

“The decline in financial expenses mainly stems from reduced interest expenses due to shrinking borrowing scale and increased exchange gains,” added Luoyang Molybdenum CFO Chen Xingyao at the performance meeting.

Shift in Growth Model

While high growth on the profit side was the main highlight throughout the year, cash flow pressure is an unavoidable reality for Luoyang Molybdenum.

The financial report shows that in 2025, net cash flow from operating activities decreased by 117.5k yuan, a drop of 35.64%. Quarterly data shows more uneven cash flow: Q1 net cash flow from operating activities was only 13.9k yuan, surged to 7.1k yuan in Q2, then fell back to 157.23B and 2.88B yuan in Q3 and Q4 respectively.

Regarding the divergence between cash flow and net profit, Chen Xingyao explained: “The net inflow from operating activities of the basic metal trading business decreased mainly due to the increase in inventory value under IXM trade and margin deposits.”

The financial data shows that inventory balance increased by 35.89% to 11.54B yuan, with IXM trade inventory measured at fair value, and the change during the period positively impacting profit by 1.31B yuan, but not bringing actual cash inflow; among other current assets, trade business margin deposits surged by 249.40% to 10.7B yuan, further occupying operating funds.

Chen Xingyao also stated that this impact has significant phased characteristics. “As prices stabilize, the situation will improve. At the end of last year, our copper inventory in trade increased by 49k tons. Since the beginning of this year, the company has intensified sales at high levels, with a single-month sales volume reaching 70k tons in March, quickly recouping cash, and in recent months, a large amount of funds have been recovered.”

The phased pressure on operating cash flow essentially reflects Luoyang Molybdenum’s strategic expansion in advance.

In 2025, Luoyang Molybdenum completed two major gold mine acquisitions, rapidly building its gold business segment. In June, it acquired 100% of Ecuador ODHIN Mining for 581 million Canadian dollars; in December, it spent 3.85B US dollars to acquire four operating gold mines in Brazil.

According to its plan, the Brazilian gold mines are expected to produce 6–8 tons of gold annually in 2026, and the ODHIN project will be completed and put into operation by 2029. After reaching full capacity, the company will have an annual gold production capacity of 20 tons.

“In 2025, we will focus on gold resources as a key expansion direction, through a series of precise acquisitions, officially launching the gold business segment and upgrading our diversified mineral layout,” said Luoyang Molybdenum Secretary Xu Hui in the performance report.

Behind the series of acquisitions is Luoyang Molybdenum’s shift in the investment mode of the mining industry cycle. In 2025, the global mining landscape underwent deep adjustments.

Among them, the Democratic Republic of Congo implemented cobalt export quota policies, China strengthened export controls on strategic resources like tungsten and molybdenum, and new copper mine projects worldwide became scarce, leading to a general upward cycle in metal prices. Luoyang Molybdenum seized this cycle window, using counter-cyclical mergers and acquisitions to improve its product matrix. Currently, it has formed a product portfolio of copper, cobalt, molybdenum, tungsten, niobium, phosphorus, and gold, becoming one of the few diversified mineral resource companies globally.

Large-scale external expansion inevitably places higher demands on Luoyang Molybdenum’s capital management. In 2025, its net cash flow from investing activities was an outflow of 4.98B yuan, a significant decrease of 622.34% year-on-year, mainly used for long-term asset purchases and acquisitions.

To optimize capital structure and ease the funding pressure from expansion, Luoyang Molybdenum issued a 1.2 billion US dollar zero-coupon convertible bond in January 2026, with an initial conversion premium of 28.70%. The raised funds will be used for overseas project expansion and working capital.

Regarding market-focused small metal business layout, Luoyang Molybdenum Chairman Liu Jianfeng said: “Small metals are part of Luoyang Molybdenum’s gene. Products like molybdenum, tungsten, niobium, and cobalt have always been the foundation of the company’s long-term development.”

“Faced with the rising prices of small metals since 2026, the company will fully deliver production guidance and leverage the profit benefits brought by price increases; meanwhile, in the process of advancing copper-gold strategies, we will consider the co-production effects of associated small metals, and under reasonable conditions, seek independent small metal mine projects to improve our diversified product matrix,” Liu Jianfeng stated.

Looking at this financial report, Luoyang Molybdenum has advanced its profit realization and strategic layout simultaneously during the cycle upswing.

High growth and quality improvement on the profit side verify the resilience of its core assets; while the pressure on cash flow is a short-term cost of its counter-cyclical expansion.

For this diversified mining giant, whether its long-term value can be realized depends mainly on its ability to balance capacity release and cash flow recovery amid cyclical fluctuations.

Editor: Zhang Bei Chief Editor: Zhang Yuning