Core Viewpoint - The non-ferrous metals industry in China has shown strong resilience in its overall performance during the first half of 2025, despite facing challenges such as resource security and overcapacity [1] Industry Performance - The China Nonferrous Metals Industry Association reported that the industry exhibited robust development in the first half of 2025 [1] - Key enterprises in the non-ferrous metals sector are experiencing a generally positive operational status [1] Challenges Faced - The industry is confronted with several issues, including resource security, overcapacity, and the management of dual-use items in import and export [1] - The association aims to address these challenges by enhancing interaction with central and relevant departments [1] Future Actions - The China Nonferrous Metals Industry Association plans to compile and address urgent issues faced by enterprises to support high-quality development in the industry [1]

Investment Rating - Industry rating: Recommended [5] Core Insights - The report highlights a year-on-year increase in alumina production by 0.4% to 1.27 million tons and a 3.7% growth in electrolytic aluminum production to 309,000 tons in Q2 2025 [1] - The Worsley alumina production for Q2 2025 was 936,000 tons, a 2% increase year-on-year, while the annual production for FY2025 is projected at 3.727 million tons, a 1% decrease from the previous year [1] - Brazilian alumina production remained stable at 334,000 tons in Q2 2025, with an annual production increase of 4% to 1.34 million tons [2] - Brazilian electrolytic aluminum production surged by 36% year-on-year to 38,000 tons in Q2 2025, with an annual production of 138,000 tons, reflecting a 33% increase [3] - Hillside electrolytic aluminum production for Q2 2025 was 181,000 tons, a 1% increase year-on-year, while annual production remained stable at 718,000 tons [4] Production and Sales Summary - Worsley alumina sales in Q2 2025 reached 1 million tons, a 3% increase year-on-year, while annual sales were 3.699 million tons, a 2% decrease [1] - Brazilian alumina sales in Q2 2025 were 335,000 tons, a 6% decrease year-on-year, with annual sales of 1.349 million tons, a 5% increase [2] - Brazilian electrolytic aluminum sales in Q2 2025 were 46,000 tons, a 53% increase year-on-year, with annual sales matching production at 138,000 tons [3] - Hillside electrolytic aluminum sales in Q2 2025 were 194,000 tons, a 5% increase year-on-year, with annual sales of 732,000 tons, a 2% increase [4] - Mozal electrolytic aluminum production in Q2 2025 was 90,000 tons, a 17% increase year-on-year, with annual production of 355,000 tons, a 13% increase [9] Cost and Operational Efficiency - The report indicates that the operating unit costs for FY2025 are expected to align with guidance due to strong operational performance and ongoing cost efficiency measures [16] - Specific cost expectations for various operations include Worsley alumina at $305 per ton and Brazil aluminum at approximately 5% below H1 FY2025 [23] Development Projects Update - The Hermosa project saw an investment of $517 million in growth capital expenditures for FY2025, focusing on the Taylor zinc-lead-silver project and Clark battery-grade manganese exploration [17] - The report notes that the environmental impact report for the Hermosa project is a significant milestone, with the final report expected in the second half of FY2026 [19] - Greenfield exploration investments for FY2025 totaled $35 million, targeting multiple base metal exploration projects [20]

Group 1 - The industrial metals sector is significantly boosted by policy support, with the "Work Plan" expected to expand demand and optimize supply, enhancing industry confidence [1] - The Ministry of Industry and Information Technology aims to promote structural adjustments in key industries, optimize supply, eliminate outdated capacity, and implement high-quality development plans for copper and aluminum industries to stabilize growth and promote transformation [1] - In the strategic metals sector, prices for praseodymium and neodymium oxides have rebounded from a low point, while black tungsten concentrate prices have reached a historical high, indicating potential valuation reconstruction opportunities amid global supply chain autonomy pursuits [1] Group 2 - The Nonferrous 60 ETF (159881) tracks the CSI Nonferrous Metals Index (930708), which is compiled by the China Securities Index Company and includes listed companies involved in the mining, smelting, and processing of precious and industrial metals, reflecting the overall performance of the nonferrous metals industry [1] - The index exhibits significant cyclical characteristics, providing investors with an effective tool to measure the development status of the nonferrous metals industry [1] - Investors without stock accounts can consider the Guotai CSI Nonferrous Metals ETF Initiated Link C (013219) and Guotai CSI Nonferrous Metals ETF Initiated Link A (013218) [1]