/ / EN
Chairman's Address


In 2020, the most influential world event was the outbreak of the novel coronavirus(“COVID-19”) pandemic, which has taken many valuable lives and overturned the normal operation of the whole world. After the outbreak of the COVID-19 pandemic, we strictly implemented various containment measures in accordance with the pandemic prevention and control guidelines. We could not be more grateful that none of the Company’s employees was infected with COVID-19 since the outbreak of the pandemic.

With careful arrangement of appropriate prevention and control measures, the Company’s production activities had not been significantly affected in 2020. Benefiting from the strategy of asset portfolio optimization in the last few years, the Company’s revenue hit an all-time high of RMB2.68 billion in 2020, registering a four-year compound growth rate of 36.34%. Net profit attributable to shareholders of the parent company was RMB380 million, representing a year-on-year growth of 27.94% and maintaining rapid growth for four consecutive years.

 

In 2019, the Company acquired the high-purity iron business from its controlling shareholders, which furtherextended the Company’s value chain in iron ore business to high-end manufacturing materials. The addition of high-purity iron business has changed the Company’s revenue structure. In 2020, the Company’s revenue from high-purity iron business accounted for 62% of its total revenue, marking the Company’s transformation from a bulk resource manufacturer to a high-end manufacturing material supplier. As such, both the Company’s influence over downstream enterprises and profitability have been further enhanced.

Under the guidance of the above strategy, in November 2020, the Company acquired a high-purity iron manufacturer in Benxi, Liaoning Province, the PRC by way of share issuance. The manufacturer has a production capacity of high-purity iron of 270,000 tons per annum, which, combined with our existing production facilities, expanded our production capacity of high-purity iron to 930,000 tons and further increased our market influence in this sector. Benefiting from the technological improvement of Lagu Factory in 2019 and the output from the newly acquired factory, the Company produced a total of 660,000 tons of high-purity iron in 2020, up by 129% year-on-year.

Mineral resources are the cornerstones of the Company’s business. The Company always attaches great importanceto the exploration of resources and constantly increases its investment in this regard, which has continued to make progress. From 2019 to 2020, a total of 68 holes were drilled in the exploration area of Maogong Mine, with a cumulative drilling footage of more than 39,000 meters. Major breakthroughs were made in terms of exploration.Six economically valuable ore bodies were discovered in the Eboling section of the exploration area, which has increased the resources by 16,320,000 tons (an increase of approximately 72% as compared to the end of 2019), and the average grade of TFe was 35.94%. The increase in resources from Maogong Mine has not only extended the service life of Maogong Mine, but also laid a solid resource foundation for the continuous operation of the Company’s high-purity iron business. The Company will continue to devote resources to increase its exploration efforts in the remaining exploration areas of Maogong Mine with a view to securing more resources.

Prior to 2020, the Company adopted two underground mining techniques simultaneously, namely ramp and shaft. As ramp mining may not be suitable after reaching a certain depth of the mine, the raw ore output of Maogong Mine in 2020 decreased as compared with that of 2019, bringing the Company’s iron ore concentrates output in 2020 to 1.48 million tons. However, based on the exploration of surrounding areas and expansion of mining areas over the past few years, the iron ore concentrates output may gradually rebound in the future. Meanwhile, the Company will step up its efforts in the expansion of its high-purity iron business. Hence, the iron ore concentrates from Maogong Mine will also be mainly used to satisfy the need of the production of high-purity iron of the Company.

 

In 2020, the Company also made significant progress in the development of the PGO gold mine project in Australia. In March 2020, the Northern Territory Environment Protection Authority of Australia provided an approved assessment report on Tom’s Gully gold mine, completing the final procedure of the environmental impact assessment. The environmental impact assessment procedures of Rustlers Roost gold mine have also commenced officially. Various works in relation to preliminary feasibility study such as processing tests (recovery rate of processing), milling tests and slope stability tests as well as estimation of operation costs and reserves have been basically completed, laying a solid foundation for Rustlers Roost gold mine to enter the stage of construction.

The Company continued to carry out exploration works in Coolgardie gold mine and Rustlers Roost gold mine. Among which, the total gold ore resources of Coolgardie gold mine project has increased by 73% from 201,000 ounces to 347,000 ounces, bringing the total gold ore resources of the Company to 2.14 million ounces. The analysis on exploration data of Rustlers Roost gold mine is still in progress. In 2021, the Company will edge up its efforts in the exploration of Rustlers Roost gold mine with a view to further extending the mine life of Rustlers Roost gold mine which is expected to commence construction.

Adhering to the principles of “safety, community harmony and green mine”, China Hanking always attaches great importance to safety and environmental protection in its corporate governance. China Hanking has achieved zero fatality, casualty, environmental pollutions, occupational morbidity rate and fires for four consecutive years as of the end of 2020.

 

OUTLOOK

The Chinese government has set the goal for energy conservation and emission reduction to achieve carbon dioxide emission peak by 2030 and carbon neutrality by 2060. Under this grand mission and goal of carbon neutrality, China is accelerating the transformation of its energy structure. By 2030, China’s carbon dioxide emissions per unit of GDP will decrease by over 65% from the level in 2005, and the proportion of non-fossil energy in primary energy consumption will reach about 25%, which will have a positive impact on the development of new energy industry, including wind power, in the long run.

 

The emergence of large-scale wind turbines is a necessary step for lowering the cost of wind power. Wind turbines with rotary of longer diameter and wheel hub of higher height will gain more momentum in regions with lower wind speed and hence increasing the power capacity and the number of utilization hours of the wind turbines.

The emergence of large-scale wind turbines has become a definite trend. Currently, onshore wind turbines with an average power capacity of over 3MW or 4MW are very common around the world, and it is planned that several types of wind turbines with a power capacity of over 5MW will be put into operation extensively in 2021 to 2022, while offshore wind turbines generally has a power capacity of over 5MW. Many manufacturers have successfully developed models with a power capacity of over 10MW, which are planned to be launched into the market extensively in the next few years. Amidst this development trend of large-scale wind turbines, with the increase of size, the wind turbines have higher requirements for the production of wind power castings, and thus have higher requirements in terms of the quality of pig iron used for ductile casting, a requisite process for producing such castings, which is conducive to enhancing the competitiveness of Hanking’s high quality ductile casting pig iron in the industry.

Benefiting from the technological improvement of Lagu Factory in 2019 and the merger and acquisition in 2020, the Company’s production capacity of high-purity iron has reached 930,000 tons. The Company will continue to leverage its advantages in the high-purity iron sector in terms of resources, technology, production capacity and market to increase the output and sales volume of its high-purity iron, thereby consolidating its status as the “largest supplier of wind power ductile casting iron in China’s market”.

 

After over two years of preliminary development, the construction works of Rustlers Roost gold mine will officially commence in 2021 and is expected to commence production in 2022. We will make careful arrangements for the construction works to control the overall investment cost and shorten the overall construction period as far as possible.

 

APPRECIATION

Since 2016, the quality of assets and operating results of the Company have seen year-on-year improvements.This was attributable to the fact of forging ahead and striving to make best endeavors by all the employees of the Group despite the hardship and challenges. Such achievements would not be possible without the support from the Shareholders and various partners of the Company. On behalf of the Board, I hereby wish to express my heartfelt gratitude to the management and all staff of the Group for their efforts and contributions throughout the past year.

The Company always values the return to Shareholders. In order to further increase the return to our Shareholders, the Board of the Company has formulated the “Dividend Distribution Plan for Shareholders for the Next Three Years (2020-2022)” of the Company in 2020. In particular, it is stipulated that the Company will make interim and annual profit distribution, and the amount of dividend shall account for at least 30% of the Group’s total net profit for the period. In 2019, the Company distributed a dividend of HK$0.12 per Share. The Board recommended the payment of a final dividend of HK$0.08 per Share for the year ended 31 December 2020. The Company will continue to put more efforts in creating value for the Shareholders and increasing the return to them through various means.

 

Mr. Yang Jiye

Chairman of the Board