Zijin Mining's Gold Dilemma: A Tale of Plunder and Resilience

Zijin Mining Group, a Chinese mining conglomerate, has been grappling with a pressing issue – illegal mining and gold 'plunder' at its operations. As an investor, one might wonder: how much gold has Zijin Mining Group actually lost due to these activities, and what impact has this had on the company's performance and future prospects?

Illegal mining and gold 'plunder' have been significant challenges for Zijin Mining Group, with notable incidents occurring in Colombia and Suriname. In 2024, a drug-trafficking gang, the 'Sea of Plenty' gang (Gulf Clan), allegedly 'plundered' approximately 3.2 tons of gold worth around $2 billion from Zijin's Buriticá mine in Colombia. While this incident has understandably raised concerns, it is essential to examine the broader context and assess the impact on Zijin's overall production and financial performance.



According to Yicai Global, Zijin Mining Group's gold production has been steadily increasing despite these challenges. In 2020, Zijin Mining Group produced 8.3 tons of gold, and in 2023, its gold production reached 50 tons – a significant increase despite the challenges posed by illegal mining. To quantify the impact of illegal mining on Zijin's total production, we can calculate the percentage of gold 'plundered' relative to Zijin's total production. Based on available data, the 3.2 tons of gold lost to illegal mining represents approximately 6.4% of Zijin's total gold production in 2023.

While this incident is unfortunate and highlights the challenges facing the mining industry, it is important to note that Zijin's overall production and financial performance have not been significantly impaired by illegal mining activities. Zijin's 2023 interim results showed consistent growth in main mineral product output, including a 19.63% year-on-year increase in gold production. The company's earnings have remained stable, with total revenue reaching RMB 150.3 billion, a 13.5% year-on-year increase, and net profit attributable to shareholders of the parent company reaching RMB 10.3 billion, up 38.99% from H2 2022.



Zijin Mining Group has taken steps to mitigate the effects of illegal mining and protect its assets. Following the 2024 incident, they acknowledged the worsening security situation and firmly condemned non-legal mining activities. They also emphasized their commitment to working with Colombian authorities to combat this issue. Additionally, Zijin has implemented safety measures, such as maintaining security agreements with the government and investing in mine security infrastructure. To further protect their investments, Zijin has diversified its mining portfolio by acquiring mines in other countries like Suriname and Tibet, spreading risk and increasing overall resilience to illegal mining activities.

In conclusion, while Zijin Mining Group has faced significant challenges with illegal mining and gold 'plunder', the impact on the company's overall production and financial performance has been relatively minimal. The company has demonstrated resilience and commitment to addressing these issues, implementing measures to protect its assets and maintain growth. As an investor, one should consider Zijin's consistent earnings, stable performance, and strategic focus on wealth management when evaluating the company as an investment opportunity. Despite the challenges posed by illegal mining, Zijin Mining Group remains a robust and enduring player in the mining industry, deserving of careful consideration in a balanced investment portfolio.