PACRA Maintains Entity Ratings of Malik MIJ Chunxing Resources Recycling Company Limited

Malik MIJ Chunxing Resources Recycling Co. Limited (MMC or "the Company") is a leading player in Pakistan’s lead smelting and recycling sector. The Company specializes in recycling Used Lead Acid Batteries (ULAB) and refining lead bullion. Committed to sustainable practices, MMC provides comprehensive solutions for the efficient utilization of ULAB across Pakistan, with a goal of producing 99.994% refined “Green Lead.” The Company’s total production capacity stands at 50,000 tons per annum, encompassing both smelting and refining operations. MMC benefits from a strong ownership structure, operating as a strategic joint venture among leading global players. This includes Jiangsu Chunxing Resources Recycling Company, one of China’s largest lead recyclers with over four decades of experience in secondary lead production and recycling, and MIJ International, a UAE-based global metals trader. Additionally, local industry players with extensive market experience contribute to MMC’s strategic advantage. This partnership grants MMC access to advanced recycling technologies and a diverse global clientele. Pakistan’s lead recycling industry remains fragmented, with MMC facing competition from a large, unorganized sector. The demand for recycled lead is closely tied to energy deficits and trends in the auto sector. In FY24, lead-acid battery production volume experienced a slight year-over-year decline due to reduced demand stemming from the economic slowdown. However, in the first half of FY25, demand rebounded as macroeconomic conditions stabilized, driven by the growing adoption of solar energy solutions and a recovery in the automobile sector. Strategically positioned in both local and export markets, MMC leverages its partnership with MIJ, which acts as a quality guarantor (ensuring 99.994% refined lead) for international sales, primarily to Trafigura, a globally renowned commodity trader. In FY24, MMC's revenue grew by ~24%, reaching PKR 25bln, with exports contributing 35.6% in total sales. The revenue increase was driven by price inflation and higher sales volumes, leading to improved profitability margins at all levels. Looking ahead, MMC plans to expand its production capacity over the next three years. Additionally, it has diversified its product portfolio by becoming the only local producer of Calcium Alloy and Antimony Alloy, key materials used in battery terminals and maintenance-free batteries. MMC’s board primarily serves an advisory role, with members bringing extensive industry-specific expertise and technical knowledge. The Company maintains an adequate financial risk profile, supported by strong cash flows, working capital cycles, and financial coverage ratios. Its capital structure remains leveraged, with short-term borrowings primarily used for working capital needs while maintaining a moderate equity base.
The ratings depend on upholding sustainable profits while retaining sufficient cash flows and coverages. The company needs to enhance its governance framework and the efficacy of the financial transparency. Furthermore, adherence to maintaining its debt metrics at an adequate level is a prerequisite.

About the Entity
MMC is an unlisted public company. It is a J.V between Chunxing RRC (45.82% shareholding), MIJ (18.67%), and Mr. Babar Waheed Malik-CEO and board chairman holds 17.75%. Mr. Saeed Rafiq holds 17.75%. MMC board consists of four non-executives and one executive director.