Hbis Resources Co.,Ltd. (000923.SZ), which had just conveyed positive signals to investors about the smooth ramp-up of its second-phase copper production, has now encountered a significant force majeure event from nature.
On the evening of February 4th, Hbis Resources announced that its subsidiary, Palabora Copper Proprietary Limited (PC), located in South Africa's Limpopo province and the adjacent Mpumalanga province, recently experienced the most severe flooding disaster since the year 2000. PC has suspended production and construction activities at its underground mine to concentrate efforts on underground drainage, equipment maintenance, and safety hazard inspections. This disaster is expected to impact PC's copper product production for approximately two months.
Hbis Resources stated that, given the disruption to underground mining operations, the incident is anticipated to adversely affect the company's annual production and sales plan, though the specific extent of the impact requires further assessment based on subsequent investigation results.
In this context, the company's stockpile of approximately 100 million tons of magnetite ore stored above ground may become the sole stabilizing factor to hedge against performance risks.
The newly established primary production source has been severely impacted just as it became operational, hindering the release of the second-phase copper project's 10-million-ton capacity.
Just over half a month ago, Hbis Resources' management team hosted research visits from several well-known institutions, including China Securities Co., Ltd. and Penghua Fund Management Co., Ltd. At that time, the signals conveyed by the company were positive and clear.
According to the "Record of Investor Relations Activities" disclosed on January 15th, 2026, the second-phase copper project of PC was in the "production ramp-up stage," with a designed raw ore capacity of 11 million tons per year, expected to reach this designed capacity standard by the end of 2026.
However, this established growth trajectory has been interrupted by the sudden natural disaster. According to the February 4th evening announcement, due to persistent heavy rainfall and regional flooding, PC's location suffered the worst floods since 2000. "Inflow from the open pit and surrounding catchment areas into the company's mine shafts has caused water accumulation in some tunnels of both the first and second copper phases, resulting in the flooding of some key facilities."
For Hbis Resources, the stoppage of the second phase is particularly painful because it coincides with a critical transition period between the old and new operations. During the January 15th research session, Hbis Resources indicated: "The ore grade of the company's first-phase copper mine is currently relatively low, and it is nearing the end of its mine life. Therefore, at this stage, the supply of the company's copper products is primarily contributed by the second-phase copper mine."
Now, with the primary mine halted due to the disaster, this is undoubtedly a significant blow to Hbis Resources.
Firstly, there is the direct loss of production output; Hbis Resources' announcement notes that "this disaster is expected to impact PC's copper product production for approximately two months." Secondly, there are potential repair costs and asset impairment risks. "PC has suspended production and construction activities... to concentrate efforts on underground drainage, equipment maintenance, and safety hazard inspections." However, Hbis Resources also mentioned that the direct economic losses caused by the disaster (including equipment damage, material scrapping, emergency response expenses, etc.) cannot be assessed at this time.
Industry data shows that by early 2026, with sustained increases in international commodity prices, domestic copper prices had climbed from less than 70,000 yuan per ton at the beginning of the previous year to over 100,000 yuan per ton, an increase of nearly 50%.
Currently, in a market environment where copper prices remain high and volatile, missing a two-month production window means the company will forgo a portion of its gross profit, representing a non-trivial setback for Hbis Resources.
While underground operations are halted, surface activities continue normally, with the "cash cow" magnetite business operating at full capacity.
With copper operations stalled due to force majeure, Hbis Resources' unique "copper-iron dual-drive" business model demonstrates strong risk resilience. Unlike the deeply buried copper ore, the company's magnetite is primarily sourced from surface stockpiles, giving it a natural advantage in facing flood disasters.
The latest announcement specifically emphasized: "As of the date of this announcement, the company has approximately 100 million tons of magnetite ore stockpiled on the surface. Currently, the production and shipment of surface magnetite ore are proceeding normally."
More positive news comes from the logistics side. In the January 15th research session, Hbis Resources revealed: "As the South African economy gradually recovers, the demand for rail transport capacity locally is showing a trend of gradual increase."
"The company's magnetite is a by-product separated during the processing of copper ore. After decades of mining accumulation, the current stockpile of magnetite is approximately 110 million tons. Due to the higher proportion of high-grade magnetite sold in previous years, the average grade of the current stockpile has decreased from the initial 58%." Hbis Resources stated at the time.
This also implies that during the suspension of underground copper mining, Hbis Resources is fully capable of shifting resources and focus towards the production and shipment of magnetite, aiming to compensate for the copper product shortfall by increasing iron ore sales.
A review of the company's past financial data shows that the magnetite business has consistently played the role of a "cash cow." In multiple periodic reports for 2024 and 2025, stable sales of magnetite were a key pillar of the company's revenue. For instance, in the first half of 2025, magnetite contributed revenue of 1.83 billion yuan, accounting for 64.84% of the company's revenue for that period.
"The company plans to deeply process the stockpiled magnetite through process upgrades such as modifying the grinding mill system and adding a drying process, with the goal of achieving an annual output of 6 million tons of iron ore with a 65% grade, while also improving product quality stability to enhance the market competitiveness of high-grade iron ore and further reduce costs and increase efficiency." Hbis Resources mentioned during the investor communication on January 15th.
Hbis Resources also stated that after increasing the ore grade from 58% to 65%, although the cost per ton increases slightly, the overall economic benefit improves due to the price differential.
Furthermore, in the February 4th evening announcement, Hbis Resources indicated that the company has initiated relevant insurance claim procedures and is fully advancing post-disaster recovery efforts.
Comments