Asian Metal：Hello, Mr. Wang, thank you for accepting Asian Metal's interview. Could you please give us a brief introduction about arsenic trioxide operation of your company.

Mr. Wang: Our company mainly deals with the production of cobalt metal, arsenic trioxide, nickel hydroxide intermediates, iron ore fines, crude gold and silver and other mineral products with cobalt smaltite from Bou Azzer of CTT through hydrometallurgy.

CTT is the only underground cobalt-arsenic mine in the world. Since the first mining in 1928, the proved reserves could be mined for ten years, and we have always ensured over ten-year reserves. There remains a large scale to be developed and explored with rich mineral resources.

CTT cobalt metal is the registered brand in LME and CTT is the permanent member of CDI Cobalt Association. We have an annual capacity of 7,000-10,000t of arsenic trioxide, the by-product of cobalt metal production, and are one of largest suppliers in the world. The capacity of arsenic trioxide fluctuates with the content of arsenic contained in cobalt ore. For example, prices for cobalt increased sharply in 2018 and we preferred to develop mines that contain more cobalt, which led to much lower arsenic output.

Asian Metal: Thanks for your detailed introduction. Could you please introduce yourself next?

Mr. Wang: I am Sam Wang, Sales Director of CTT and one of two Chinese among 5,600 employees of CTT Mining Group in Morocco. I have been a member of CTT since 2009 and in charge of global market sales and sale strategy of cobalt metal, nickel intermediates and arsenic trioxide.

Asian Metal: We are interested in the downstream usage and volume of arsenic trioxide. Please give us a brief description.

Mr. Wang: OK. Arsenic trioxide is mainly applied in wood treatment-CCA, MSMA, glass bleaching agent, separation agent for copper-zinc ore beneficiation and anti-cancer medicine such as that against leukemia. At present, global consumption for arsenic trioxide is about 30,000tpy, of which wood treatment-CCA and MSMA take the largest part.

Asian Metal: The production and export of Chinese arsenic trioxide are restricted in 2018 due to the stricter environmental inspections. Is there any impact on your company?

Mr. Wang: Besides Morocco, major arsenic trioxide suppliers are in China, the largest exporter of the material. Chinese exporters characterize themselves with unstable supply. Besides environmental protection policies, plants also suspended supply for a lack of electricity and water in summer vacation in the previous years. Moreover, most domestic plants use coal as fuel and would be required to suspend production by the government during national or international conferences or programs held in China for the sake of good air quality. Overseas buyers accustomed to that usually hold ample stocks, which can be consumed during the supply suspension, and build inventory in large volume when export is allowed. This is the usual business model.

However, as the strict environmental inspections in 2018 lasted for much longer time than expected, downstream buyers were in a hurry to make more purchases from us. But it is difficult for underground mine to increase production and our capacity of arsenic trioxide decreased this year as the most valuable product is cobalt rather than arsenic. As a result, we have a tense relationship with clients. We also hope that domestic suppliers can provide stable supply, which will benefit the healthy development of whole arsenic trioxide industry chain.

Asian Metal: What are the advantages of your arsenic trioxide products in the international market?

Mr. Wang: We have following advantages:

First, quality. CTT's production technique includes high-temperature resistance calcination and separation equipment, and thus we can produce arsenic trioxide 99.5%min with high purity and low moisture, which is superior to arsenic trioxide 98%min or 97%min in the domestic market. In terms of quality control, CTT's laboratory, with the most advanced equipment in Africa, is among the few ones that can analyze arsenic trioxide quality in the world and has strict quality control on product.

Second, the highest level of workplace safety and environmental requirements. CTT has the same requirement in workplace safety as that in Europe and America. Our production and stock employees all wear TYVEK anti-dust space suits, and online employees carry oxygen cylinder. We have ISO 18001 and other qualities, and ranked among top 20 in VEGIO labor right appraisal in 2017, better than Coca Cola, which can show that we pay high attention to labor right and safety. In the meanwhile, our mine and smelting plants have the qualities of ISO 14001 environmental protection safety and ISO 26000 social responsibilities, which means that we give high priority to investment in long-term development and social responsibilities.

Third, good reputation of long-term and stable supply. CTT is famous for valuing the spirit of contract and has good reputation for stable supply of arsenic trioxide in the past over 20 years. We can guarantee the fixed supply per month as the business and production environment in Morocco is quite stable except the change of arsenic contained in raw ores. At the same time, CTT usually signs one-year long-term contracts with clients and will not increase prices or reduce supply amount during the period based on mutual trust. Thus, major arsenic trioxide buyers in the world will sign annual contracts with CTT to ensure the stable supply.

Asian Metal: What is your opinion about the price trend for arsenic trioxide in Q3 and Q4 2018? Will you adjust your supply by then?

Mr. Wang: I think prices for arsenic trioxide would increase stably in the international market in 2019 due to higher prices for oil, freight and treatment charges for raw ores containing arsenic as well as higher labor costs in Morocco.

However, prices for arsenic trioxide in the domestic market are unpredictable. Plants usually sell at lower prices owing to cutthroat competition, a lack of bargaining power and capital pressure. Chinese producers pay little attention to sale prices as they mainly get profit from disposal of waste in tailings or intend to obtain capital gain from IPO. Export prices for Chinese arsenic trioxide are the lowest ones in the international market.

Prices for arsenic trioxide might increase in the domestic market because of higher freight and environmental protection costs if environmental protection policies become stricter. But there is also possibility that domestic plants are in a hurry to sell in bulk in a short time to gain money. In a conclusion, it is difficult to predict both the export price and volume of Chinese arsenic trioxide.

Asian Metal: What do you think of the market outlook of arsenic trioxide?

Mr. Wang: Demand for arsenic trioxide has increased stably in recent years, especially that for MSMA following increased prices for sugar and cotton, etc. We predict that demand for arsenic trioxide would increase by about 3-5% per year in the coming five years and MSMA would be the field with a faster growth rate.

And what arsenic trioxide buyers worry most is the supply. CTT and other overseas producers cannot meet the demand in the market without sufficient supply from China.

Thus we expect to see the stable supply of arsenic trioxide from domestic plants, but we do hope that they can pay attention to safety production and environmental regulation. We visited some plants in China, which took far fewer measures on employees' safety. In order to save costs, producers were in the gray zone, including the production with coal, non-standard disposal of waste and transportation of dangerous objects. Plants pay money on external costs such as environmental protection and labor safety rather than the product itself to reduce prices. As a result, buyers can purchase arsenic trioxide at a relatively low price, but the harm of non-standard production of arsenic trioxide exists in China, which is short-sighted and can't last long. I believe that global buyers will be pleased to see Chinese producers' standard production even if they have to pay higher costs. In the long run, the whole industry will benefit from the stable supply of arsenic trioxide, which is also the responsibility of the industry.

If domestic producers have no plans to make improvements, China will be a place that is not suitable to produce arsenic trioxide. What's more, there is large uncertainty for the production and supply in China due to stricter regulations and environmental inspections, which will lead to supply shortage and sharply increasing prices in a short term globally. When prices for arsenic trioxide keep increasing for a long time, new plants will appear in Southeast or other regions in Asia, and then the market will tend to balance again.

Asian Metal：Thank you again for accepting our interview. Wish your company a prosperous future!