Economic Observer reporter Wang Yajie

On May 7, 2026, Huayou Cobalt (603799) announced its intention to acquire 100% equity of Atlantic Lithium Australia for $210 million (approximately RMB 1.428 billion), whose core asset is the Ewoyaa lithium mine project in Ghana.

On May 6th, multiple departments in Qinghai Province jointly issued a financial plan for the transformation of the aluminum industry, supporting enterprises represented by China Aluminum Qinghai Branch to transform into green electric aluminum. China Aluminum Qinghai is promoting the green electric direct connection project and planning the layout of deep processing capacity such as aluminum foil in the local area.

Earlier, Northern Rare Earth focused on anchoring new energy permanent magnet materials in the first quarter of new production capacity.

The intensive actions of top enterprises have gradually gathered a new industrial signal: China's non-ferrous metal industry is betting on the long-term track of new energy for the future.

According to the data released at the first quarter press conference of the China Nonferrous Metals Industry Association in 2026, the total profit of large-scale non-ferrous enterprises in the first quarter reached 192.85 billion yuan, a year-on-year increase of 110.7%. The association has made it clear that the core engines of profit growth have shifted to new energy, energy storage, and AI (artificial intelligence) computing power.

This to some extent indicates that the non-ferrous metal industry is breaking away from its path dependence on traditional cycles such as real estate and infrastructure, and entering a new growth paradigm driven by "new energy resource infrastructure".

Targeting the long track of new energy

Over the past two decades, the growth of the non-ferrous metal industry has been highly tied to real estate and infrastructure, and now this logic has come to an end. "A senior member of the non-ferrous strategic department of a state-owned enterprise told the Economic Observer that since five years ago, the company has made a clear judgment internally that the incremental space for traditional demand has basically peaked.

The person stated that the domestic real estate industry has entered a period of stock adjustment, with new construction and completion areas continuing to level off. Correspondingly, traditional bulk demand such as construction aluminum and structural copper has generally slipped into a low-speed growth range of less than 1%.

Wu Chengbo, a deputy general manager of a leading private non-ferrous enterprise located in the Yangtze River Delta, said, "The pain points of private enterprises are sharper than those of central enterprises. Traditional smelting is a business with 'high investment, high debt, low gross profit, and strong cycle'. Once the market declines, private enterprises are the first to collapse and die the fastest. In the context of zero growth in traditional demand, whoever continues to expand production is actively jumping into the pit of 'overcapacity and loss closure'

At the same time as the old growth carriage stalled, the new engine had already started.

The above-mentioned personnel from the non-ferrous strategic department of a state-owned enterprise detailed their internal demand calculation model to our reporter: "We cover the terminal demand of core varieties such as copper, aluminum, lithium, nickel, and rare earths, and the conclusion is very clear. New energy, energy storage, high-end manufacturing, and computing infrastructure have become the only deterministic incremental engine for our enterprise in the next decade

He gave an example that the aluminum consumption of a single new energy vehicle far exceeds that of traditional fuel vehicles, and the demand for high-end aluminum materials in energy storage power stations and photovoltaic brackets continues to expand. Power and energy storage batteries have driven explosive growth in lithium and nickel, while AI data centers and high-voltage transmission systems have further increased the demand for high-end copper materials.

At the first quarter industry conference on May 6th, the China Nonferrous Metals Industry Association confirmed the structural transformation trend of the non-ferrous industry with official operating data. From the demand side, AI? Energy storage, new energy vehicles, humanoid robots, and low altitude economy have become the main emerging growth points driving the consumption of non-ferrous metals. Copper, aluminum, lithium, nickel, rare earth and other varieties have also been deeply embedded in the new energy and emerging industry chain system.

The above-mentioned personnel from the non-ferrous strategy department of state-owned enterprises stated that according to their internal team calculations, the proportion of demand for major non-ferrous products in traditional real estate infrastructure is declining year by year in terms of incremental contribution, while the proportion in the new energy sector has rapidly risen to a level of 20% to 30%. It is expected that by 2030, the overall demand will exceed 40%, fully covering the demand gap in the traditional track. He further explained, "This is the biggest confidence that the industry dares to say 'goodbye to the real estate cycle'. It's not a prediction, it's a fact that has already happened. Major enterprises are not ahead of time, but have clearly observed the disruptive changes in downstream orders and product structure

Wu Chengbo gave an intuitive feeling from the micro order level. He said that the company's customer structure has undergone fundamental changes in the past two years: "Previously, our customers were scattered traders and small processing plants, without stickiness and relying on the weather to make a living. Now, we are highly focused on global leading enterprises such as CATL, BYD, LG New Energy, etc. These customers' orders are valid for three to five years, with production capacity scheduled until 2028. This is no longer a cyclical demand, but a rigid growth with long cycles and high certainty. ?

In his view, the structural changes in downstream demand are forcing upstream raw material suppliers to undergo a transformation from business logic to customer system. The use value of the non-ferrous metal industry is shifting from supporting "infrastructure houses" to providing basic material support for "green energy ecology", and the underlying code of its industrial attributes is gradually being rewritten.

The business model is iterating

From the perspective of resources, the supply elasticity of key minerals for global new energy is rapidly narrowing. Public information shows that in May 2026, due to the suspension of production and renewal of licenses for the four major lithium mica mines in Jiangxi, there was a temporary shortage of domestic lithium raw material supply, which led to a breakthrough of 185000 yuan/ton in early May and further climbed to a higher level on May 8th. Overseas, restrictions on lithium ore exports from Zimbabwe have also continued. In the nickel market, the biggest variable comes from Indonesia. The nickel mining quota for 2026 has been significantly reduced by 31% year-on-year, and the Weida Bay mine plans to shut down in mid May. The global nickel market has clearly shifted from surplus to shortage in 2026.

Wu Chengbo believes that these tightly balanced signals have made "whoever obtains resources gains the world" no longer a slogan.

Our strategy is global exploration, countercyclical acquisitions, and pursuit of high self-sufficiency, "said Wu Chengbo. Taking nickel layout as an example, the total investment of the company's laterite nickel ore wet smelting project in Indonesia exceeds 10 billion yuan. Currently, the nickel self-sufficiency rate has reached over 70%, and the cost per ton of nickel is 2000 to 3000 US dollars lower than the industry average. For private enterprises, without resources, the integration of high-end materials can be described as a castle in the air.

For state-owned enterprises with strong funds and superior energy endowments, their strategy focuses on the synergy between "green power" and "integration".

The above-mentioned personnel from the non-ferrous strategic department of state-owned enterprises told reporters that they are bidding farewell to the traditional model of "selling primary raw materials and earning processing fees" and turning to building a full industry chain barrier of "resource locking, green electricity supporting, high-end smelting, material deep processing, and binding to top customers".

The person explained that the Haiyan wind power direct connection project being promoted by their state-owned enterprise in Qinghai is the practical implementation of this strategic idea. The state-owned enterprise plans to deeply link the high energy consuming electrolytic aluminum and new energy aluminum foil production capacity with the wind and solar clean energy enriched in the western region. This not only meets the hard constraints of dual energy consumption control and carbon compliance for enterprises, but also builds a long-term stable energy cost advantage for enterprises.

In addition to resources and energy, technological barriers are the key to determining whether a company can leap from "low-end internalization" to "high-end positioning".

Wu Chengbo admitted to reporters that in the fields of mid to low end positive electrode materials, ordinary copper foil, etc., due to low technological barriers and mature processes, there are many people who follow the trend and enter the market. In the future, they will inevitably face overcapacity and price wars, and homogeneous production capacity will die. Their response strategy is to "resolutely avoid low-end products" and focus on high gross profit and high barrier products such as ultra-high nickel (9 series) ternary precursors and 4-6 ? m ultra-thin lithium battery copper foils that are "superior to others". He stated that through continuous research and development investment in these high-end products and joint research and development with top customers, the gross profit margin of their high nickel products is 5 to 10 percentage points higher than that of ordinary products, which is the direct return brought by the technological moat.

When the supply side shifts from an extensive model relying on scale expansion to a refined model constrained by the triple barriers of resources, green power, and technology, the underlying logic of industry competition will also be changed. The future competition is no longer about who has more smelting furnaces and larger production capacity, but about who has lower resource costs, more complete green power supporting facilities, and faster material technology iteration, "said the deputy general manager of the aforementioned private non-ferrous leading enterprise

From Periodic PE to Growth PEG Valuation

The leading non-ferrous metal enterprises are shifting from "earning money from cyclical fluctuations" to "earning money from technological barriers and long-term growth", and their valuation coordinates are undergoing a historic switch from cyclical PE (price to earnings ratio) to growth PEG (price to earnings ratio relative to profit growth ratio).

In the view of the strategic department personnel of the state-owned enterprises mentioned above, this is also one of the most profound values of this industry transformation: "In the past, when we communicated with investors, the core indicator was that the company had a production capacity of several million tons. Now, what we are talking about is how much new energy demand the company has bound, and how much the revenue proportion, gross profit margin, and visibility of existing orders of new energy materials have reached." He believes that the valuation ceiling of traditional smelting business is extremely low, and profits fluctuate greatly with the prices of base metals, fluctuating between good and bad years. The market can only give low PE valuation to cyclical stocks. The new energy materials business, with its high gross profit margin, long-term orders, and stable customer relationships, has significant growth attributes.

He said, "For the same amount of money earned, profits from traditional cyclical businesses and profits from stable long-term agreements in new energy materials enjoy different valuations in the capital market. We are committed to making the latter the absolute mainstay of the company's profit and valuation system

Wu Chengbo believes that the market is redefining the valuation model for non-ferrous enterprises. He said, 'In the past, analysts dismantled a non-ferrous company and calculated it based on the production capacity of mines and smelting multiplied by the average PE of one cycle.'. Now, it is to separate its new energy materials business order and give PEG valuation based on the capacity expansion, long-term contract orders, and profit forecast for the next few years. ?

He analyzed that the core variables that determine the future market value of a non-ferrous enterprise are no longer the size of its smelting capacity, but three deeper indicators: the depth of binding of new energy business, the added value rate of high-end materials, and the control over high-quality overseas resources.

Wu Chengbo said, "There will be a significant difference in market valuation between a company that owns low-cost African lithium mines, Indonesian nickel mines, and is deeply tied to the supply chains of CATL and Tesla, and a company that still relies on high domestic electricity prices and sells low-end aluminum ingots

However, he also cautioned, "Nowadays, many small and medium-sized enterprises are following the trend and squeezing into the low technological threshold of ordinary iron phosphate and ordinary precursors. The production capacity in these fields will definitely be severely overcapacity in the future, and they will fall into the internal competition of price wars. However, there will be a long-term supply gap for high-end and high stability battery materials, as well as new materials that are compatible with the next generation of solid-state batteries and sodium ion batteries

Faced with potential "internal competition" risks, the avoidance strategies of top enterprises are generally the same, such as choosing to pursue high-end, differentiated, and integrated paths.

The above-mentioned personnel from the non-ferrous strategic department of state-owned enterprises stated that all of their newly built production capacity is focused on high value-added and high-tech threshold categories, and they will no longer engage in low-end homogeneous production capacity.

A structural reshuffle around new energy materials has begun, and the top players with integrated barriers of "resources+green electricity+technology+long-term cooperation" will dominate this round of competition.