Yunnan Copper Co.,Ltd. stated on March 5 in response to an investor inquiry that, as an enterprise primarily focused on the smelting process, its main product is cathode copper. The high proportion of cathode copper in the company's profits is not contradictory to its low gross margin. The low gross margin for cathode copper directly reflects the current situation of narrowing profit margins in the copper smelting sector, which is a common challenge faced by the copper smelting industry. The core reason lies in the persistently low historical levels of copper smelting processing fees (TC/RC), which severely compress the profit margins of companies primarily engaged in smelting. To address this significant challenge, the company has proactively implemented systematic strategies centered on "extreme operational management." On one hand, the company is fully advancing its "Cost Reduction 3.0 - Relentless Cost Cutting" initiative. Through digital transformation, comprehensive benchmarking across all factors, and lean production measures, it is deeply exploring internal cost-reduction potential to enhance the cost competitiveness of its main products. On the other hand, the company leverages its advantage in comprehensive resource utilization by increasing the recovery of by-products generated during the copper smelting process, such as sulfuric acid, gold, silver, and scattered metals like selenium, tellurium, platinum, and palladium. This aims to boost profit contributions from by-products and partially offset the impact of declining processing fees. Furthermore, the company is actively optimizing its raw material mix and broadening procurement channels, including urban mining (recycled copper), to enhance the flexibility of its raw material supply.
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