Morgan Stanley has released a research note indicating that Zijin Mining's (02899, 601899.SH) Julong Copper Mine in Tibet remains a pivotal growth driver for the company. The firm has assigned a target price of HK$61 with an "overweight" rating. As the second phase of the project gradually ramps up, copper output is projected to reach between 300,000 and 310,000 tonnes this year, with a further increase to 310,000 to 320,000 tonnes anticipated next year.

On the cost front, first-half costs rose 13% year-over-year, reflecting a shift from outsourced operations to self-managed activities, including higher expenses for equipment, vehicles, and labor, some of which are one-off in nature. The bank expects cost improvements to emerge starting next year, driven by the expansion of the second phase, the adoption of electric haul trucks at the mine, and enhanced automation, which should reduce driver headcount and transportation costs.

Additionally, the Tibet government is currently deliberating an increase in the mineral resource tax rate. However, even under a worst-case scenario, the impact on the company's costs is estimated to be only around RMB 1 billion to 1.5 billion. Overall, management guidance points to group copper production of 1.09 million to 1.2 million tonnes this year. The Julong and Xianglong projects are expected to underpin growth next year, while the Xiongcun project is slated to contribute from 2028 onward, with Serbia offering longer-term upside potential. Management also anticipates that copper's contribution to the group will grow over time.