CMOC's Copper Pivot: A Strategic Bet on 2028 Capacity Amid Cobalt Policy Shifts

CMOC is executing a deliberate strategic pivot, using its cobalt by-product to fund a massive copper expansion. The company is betting that copper, not cobalt, will be the primary driver of its future growth, a shift underscored by a major investment and a clear statement from its chairman.

The core of this bet is a $1.08 billion investment to expand its KFM copper mine in the Democratic Republic of Congo. This project will add about 100,000 metric tons of annual copper output, with the second phase launching in 2027. The goal is to reach a formidable scale: produce 800k-1M tonnes of copper annually by 2028. This aggressive capacity target positions CMOC to capitalize on anticipated global copper supply constraints, particularly as disruptions at other major mines, like Freeport's Grasberg project, create market uncertainty.

Chairman Liu Jianfeng frames this pivot as a pragmatic response to the evolving landscape. He stated that cobalt is a by product of our copper production, a view that allows the company to manage policy changes in the DRC while funding its copper bet. This perspective is key to the strategy's resilience. As the DRC government introduces cobalt export quotas, Liu downplays the financial impact, noting that copper prices are much stronger and that any surplus cobalt can be stockpiled. This structural link between the two metals provides a financial buffer, letting CMOC navigate regulatory shifts without derailing its copper-focused investment plan.

The bottom line is a clear reallocation of capital and focus. CMOC is treating cobalt as a secondary, manageable output stream, while directing its largest capital expenditure toward scaling its primary metal. This pivot is a direct answer to market signals, positioning the company to benefit from the energy transition's copper demand while maintaining a disciplined approach to the volatile cobalt market.

Financial Engine: Trading Arm and Operational Resilience

CMOC's strategic pivot is powered by a robust financial engine, combining operational discipline with a unique market-facing capability. The company's integrated trading arm, IXM, provides a critical strategic differentiator, offering a global marketing and logistics platform that strengthens its grip on the value chain. Chairman Liu Jianfeng has emphasized that CMOC takes trading very seriously, viewing it as essential for understanding global markets and securing the company's position. This setup allows CMOC to manage the commercial side of its raw materials, from logistics to market access, creating a more resilient and informed operation.

The financial results for the first half of 2025 underscore this operational strength. Despite a slight year-over-year decline in revenue, the company posted a record net profit of RMB8.671 billion, up 60% year-over-year. This surge was driven by strong copper prices and effective cost control, with operating costs falling more sharply than revenue. The profitability boost is a direct outcome of the company's focus on its core metals and its ability to manage its portfolio efficiently.

This financial muscle is further evidenced by a significant improvement in the balance sheet. The debt-to-asset ratio decreased to 50.15%, down 9 percentage points from the same period last year. This de-leveraging provides a crucial financial buffer, strengthening the company's capacity to fund its ambitious expansion plans without overextending. The combination of high profitability and a cleaner balance sheet creates a powerful foundation for the upcoming capital-intensive phases of its copper projects.

The bottom line is a company that is not just investing for the future but is also executing flawlessly in the present. Its integrated model-production, trading, and financial discipline-forms a self-reinforcing cycle. Strong operational performance generates the cash needed for expansion, while the trading arm provides the market intelligence and commercial reach to navigate volatility. This integrated engine is what will ultimately determine whether CMOC's 2028 copper capacity target is a strategic vision or a financial reality.

Execution Timeline and Policy Catalysts

The execution of CMOC's copper expansion is now on a clear, multi-year timeline. The first phase of its KFM mine reached full capacity in 2023, establishing a baseline. The critical next milestone is the launch of the second phase, scheduled for 2027. This phase will add about 100,000 metric tons of annual copper output, directly fueling the company's goal to produce 800k-1M tonnes annually by 2028. The project's progress is a key operational test, with the 2027 launch date representing a firm deadline for the capital investment to begin translating into new supply.

At the same time, the company's strategy faces a parallel test from the regulatory front. The Democratic Republic of Congo has introduced a new cobalt quota system, a direct policy shift that will cap annual exports at 96,600 tons from 2026. This creates immediate uncertainty for a key by-product of CMOC's operations. The company's chairman has downplayed the financial impact, but the new rules-requiring a 10% royalty prepayment and a compliance certificate-introduce friction and potential delays into the export process.

The first real-world test of this new framework is imminent. Sources indicate that CMOC has begun collecting samples for its first cobalt shipment under the new quota system, with the shipment expected in the coming days. While the volume is likely to be small, as confirmed by a source at its Tenke Fungurume mine, this initial move is a critical catalyst. It will demonstrate whether the Congolese government's new system functions smoothly or if the reported compliance hurdles and legal ambiguities will disrupt global cobalt flows. For CMOC, successfully navigating this early shipment is a practical check on the regulatory stability of its operating environment, even as it focuses on its copper future.

Risk Assessment and Forward Scenarios

The strategic bet on copper is a high-stakes wager on both market timing and operational execution. The potential rewards are substantial, with the KFM expansion poised to add a major new supply stream to a market facing potential shortages. Yet the path to realizing that 2028 capacity target is fraught with tangible risks that investors must weigh.

The most significant hurdle is the operating environment itself. CMOC has explicitly warned of risks from the DRC's political and economic uncertainty. This is not a hypothetical concern. The recent introduction of cobalt export quotas, with their prepayment requirements and compliance certificates, is a concrete example of the regulatory friction that can disrupt operations and cash flows. For a company banking on a multi-year, capital-intensive expansion, any escalation in instability or policy unpredictability in the DRC would directly threaten project timelines and costs.

Execution on the copper front is equally critical. The success of the entire expansion thesis hinges on two factors: sustained high copper prices and flawless project delivery. The company is betting that global supply constraints will support prices, but that outlook is not guaranteed. More immediately, the project must hit its 2027 launch date for Phase 2 on time and within budget. Any delay or cost overrun would not only pressure the return on the $1.08 billion investment but could also erode the financial cushion needed to fund subsequent phases.

Here, the cobalt-by-product strategy provides a crucial, but not foolproof, buffer. By treating cobalt as a secondary output, CMOC can leverage its stronger copper prices to offset any near-term volatility in cobalt. Chairman Liu Jianfeng has stated that copper prices are much stronger and that surplus cobalt can be stockpiled. This creates a financial cushion that adds resilience. However, this cushion is contingent on copper prices holding firm. A significant drop in copper prices would pressure the entire expansion thesis, as it would undermine the profitability needed to fund the project and reduce the value of the by-product stream.

The bottom line for investors is a trade-off between a powerful growth catalyst and material execution risk. The company's financial engine and integrated trading arm provide tools to navigate volatility, but they cannot eliminate the fundamental risks of operating in a complex jurisdiction or the market risks of a commodity cycle. The coming years will test whether CMOC's strategic pivot is a masterstroke of timing and discipline, or a costly bet on a timeline that may be disrupted by forces beyond its control.