HBIS Resources Co., Ltd. (SZ: 000923), which recently signaled smooth progress in ramping up production at its second-phase copper mine, now faces severe challenges from natural disasters disrupting its restart plans. On the evening of March 17, the company disclosed updates on the underground mining resumption at its South African subsidiary. The announcement revealed that production at the underground copper mine operated by Palabora Copper Proprietary Limited (PC) had been completely suspended due to the worst flooding since 2000.
Current recovery progress varies between mining phases: While the first-phase copper mine has completed dewatering and resumed operations, it is running at reduced capacity. The second-phase mine, designed with an annual capacity of 11 million tons and expected to be the primary future supply source, is located deeper underground and remains in the dewatering process, with completion anticipated in early April.
Against the backdrop of international copper prices fluctuating near historic highs exceeding 100,000 yuan per ton, a two-month production halt will inevitably adversely affect the company's annual production and sales plans. However, one silver lining is that approximately 100 million tons of magnetite stockpiled above ground were unaffected by the disaster. Production and shipments continue normally for this segment, which contributes over 60% of total revenue. This reliable revenue stream may serve as a crucial stabilizer to offset the sudden operational risks and support annual performance.
Extreme rainfall in South Africa in early 2026 disrupted HBIS Resources’ production schedule. According to a February 5 disclosure, continuous heavy rain and regional flooding—the most severe since 2000—affected PC’s location in the Limpopo Province and neighboring Mpumalanga Province. Local meteorological data indicated January 2026 rainfall exceeded 890 mm, far above South Africa’s average annual precipitation of 450–500 mm.
The downpour caused large volumes of water from open pits and surrounding areas to flood into the mine shafts, submerging sections of both the first and second-phase copper mines and key facilities. PC was forced to suspend underground mining and construction activities soon after the disaster began.
After nearly two months of emergency efforts, substantive progress has been made toward restarting operations, though the overall situation remains mixed. Per the March 17 announcement, dewatering in the first-phase mine is complete, and production has resumed. However, due to prior flooding impacts, operations are currently running at low capacity to ensure safety, with output expected to increase gradually as conditions allow.
In contrast, the second-phase mine, situated at deeper levels, is experiencing slower dewatering progress and is projected to finish draining by early April. Flooding has also impacted supporting infrastructure. In a February 11 investor communication, HBIS Resources indicated that the No. 6 crusher project, part of the second-phase copper mine expansion, was progressing well with some equipment already on site and construction underway. However, flooding has delayed construction, restricting personnel and equipment deployment. The originally planned third-quarter 2026 commissioning is now expected to be postponed.
The uneven recovery poses significant challenges for HBIS Resources. In a January institutional briefing, the company highlighted that with the first-phase mine nearing depletion and lower in ore grade, the second-phase mine is currently the main source of copper supply. The second-phase project, originally in a ramp-up stage with a designed annual capacity of 11 million tons, was expected to reach full capacity by late 2026.
With the primary mining area still grappling with flooding, and copper prices having surged nearly 50% from under 70,000 yuan per ton early last year to above 100,000 yuan, the inability to produce during this high-price window represents a notable opportunity cost. CICC Wealth Futures noted on March 17 that copper prices are likely to remain elevated amid strong expectations and weaker immediate supply.
HBIS Resources acknowledged in its March 17 announcement that the disruption to underground mining is expected to negatively affect its annual copper production and sales targets, though the full impact will depend on the pace of recovery.
Amid the copper segment’s struggles, the company’s dual-focused “copper and iron” business model has demonstrated resilience. Unlike the flood-vulnerable underground copper mines, HBIS Resources’ magnetite is stockpiled above ground, offering natural risk mitigation. The company has repeatedly reassured stakeholders that magnetite operations remain unaffected: “As of the announcement date, the company has approximately 100 million tons of magnetite stockpiled. Production and shipment activities are proceeding normally, with an expected annual sales volume of 10 million tons.”
This vast stockpile consists of by-product ore separated during copper processing, accumulated over decades of mining, and now forms the foundation of the company’s financial performance. Historical financial data show magnetite as a key revenue driver. In the first half of 2025, for example, magnetite contributed 1.83 billion yuan in revenue, accounting for 64.84% of total revenue.
Logistics are also improving. As South Africa's economy recovers, rising demand for rail transport has facilitated smoother shipment of above-ground products. In a January 15 investor update, HBIS Resources mentioned plans to upgrade processing systems—including modifying grinding mills and adding drying processes—to further process stockpiled magnetite. The goal is to produce 6 million tons annually of 65% iron content ore, enhancing product quality and market competitiveness while reducing costs.
The company noted that although increasing ore grade from 58% to 65% raises costs slightly per ton, the price premium for higher-grade ore improves overall economics.
Nevertheless, despite magnetite’s role as a performance anchor, copper production delays remain the company’s biggest challenge in 2026. In January, HBIS Resources explained that lower copper margins stem from the second-phase mine not yet reaching full capacity. With copper output still limited, high fixed costs are spread across fewer units, depressing overall margins.
Until the second-phase copper mine fully resumes, the magnetite segment—operating at full capacity—will be crucial for sustaining revenue. HBIS Resources stated it would continue supervising PC’s safe and orderly resumption of copper production and provide timely updates in periodic reports or interim announcements.
In summary, while the magnetite stockpile offers strong underlying support, the timeline for the second-phase copper mine to reach full capacity remains the largest uncertainty overhanging HBIS Resources’ 2026 performance.
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