Asian Metal: Mr. Wu, thank you for taking the interview by Asian Metal. Could you please introduce your company in brief?

Mr. Wu: In the past two years, especially since this year, Guangdong Zhiyuan New Materials Co., Ltd. has done a lot of work in technical transformation and improvement, production cost reduction and efficiency improvement, environmental protection facilities improvement, standardization and compliance management, and development of overseas resources. The enterprise production management appeared the benign healthy development momentum. The annual production capacity for tantalum and niobium oxide of our plant reaches 2,000t at present and our output in 2019 expects to be around 1,500t. We are the biggest tantalum and niobium smelter in China.

Asian Metal: Recently, the supply for the tantalum and niobium concentrate from abroad remains relatively tight. What is the main reason? How to deal with it?

Mr. Wu: The current situation of tantalum and niobium resources is caused by multiple factors. Firstly, the tantalum and niobium concentrate prices continued to decrease and the enthusiasm of mining resources development in various countries declined with reduced supply. At the same time, the policy of refunding and replenishment of new energy caused the market demand of lithium products to fall short of expectations, and some mainstream lithium mines reduced production, which directly affected the output of the by-product tantalum-niobium concentrate. Before the TIC meeting in October, the lowest price for tantalite was around USD50/lb Ta2O5 CIF China and columbite price was around USD8.0/lb CIF China, which was also the lowest price level in the past few years. After the TIC meeting, many smelters and end users came back to the market with strong intention to rebuild stocks. Limited by the high production costs, most producers refused to sell their materials at lower prices, which caused relatively tight supply in the spot market. I think that the actual supply and demand fundamentals of the market have not changed much. We are always active in purchasing tantalum and niobium concentrate. Firstly, we always keep moderate inventory. Secondly, we have signed some long-order agreements with major suppliers. We also actively develop resources in major tantalum and niobium mining areas and carry out cooperation in various ways.

Asian Metal: Although tantalum and niobium concentrate prices remain at a high level, Chinese domestic tantalum niobium downstream product price still hangs upside down, how to improve this situation?

Mr. Wu: Normally, prices of tantalum-niobium products do not hang upside down for long. The domestic smelter production scale is generally small, although the number is large but relatively scattered, comprehensive strength is not strong, and the production of low-end products in the majority, product homogeneity is serious. In the last two years, some small processing plants also put into production, so price competition is inevitable, and the status quo of each enterprise is also different, resulting in a certain period of price inversion. In my opinion, it can be improved from two aspects: from the enterprise's own level, "practice internal strengths", such as strengthening management, reducing cost and increasing efficiency, and benign operation. From the perspective of the industry, because tantalum and niobium resources in China are still mainly dependent on imports, we still need to strengthen cooperation and exchanges and benign interaction at the level of resources. I think it is very important for physical smelting enterprises to maintain a reasonable profit margin and normal production and operation. Management is more important than management, because internal optimization is limited, and for products with a higher degree of marketization, how to treat downstream users, provide high-quality products, and grasp the timing of raw material procurement are very critical.

Asian Metal: What are the main products of your company? What is the future of downstream applications?

Mr. Wu: The main products are potassium fluotantalate, tantalum oxide and niobium oxide, among which tantalum oxide and niobium oxide cover 99.5-99.99% of various purity and specifications, which can meet the various needs of customers for these products. From the perspective of future development and application prospects, I am more optimistic about the growth of niobium products.

Asian Metal: What is your advantage and disadvantage compared with other smelters in China?

Mr. Wu: Our advantages are as follows:

Firstly, we are professional. Zhiyuan has been focusing on the wet process of tantalum niobium smelting, is a very professional company. Our technical and management backbone is very stable and dedicated, the core staff has 20 to 30 years of industry experience. We are focusing on one segment of the tantalum-niobium industry chain, aiming to refine.

Secondly, our technology is in the lead. Tantalum-niobium hydrometallurgy seems to have few products and a relatively simple industrial chain, but we continue to invest in technology research and development every year. In the past three years, the compound growth rate of R&D investment of the company has exceeded 60%.Compared with the traditional hydrometallurgical process, there has been a great improvement. For example, we are the best in the treatment of tantalum-ferroniobium alloy technology, and we are also the largest buyer of tantalum-ferroniobium alloy in the world. We can ensure the stability and safety of production in the treatment process, and can better control the content of key impurities in products.

Thirdly, our products have stable quality. We constantly improve the details in all aspects to ensure that we can produce high-quality and stable products, especially products with special requirements for impurities, we can achieve the advanced level of the industry.

Fourthly, we have scale advantage. At present, tantalum niobium oxide accounts for about 40% of the market share in China, making it the largest hydrometallurgical enterprise in China with obvious scale advantage.

Finally, we have brand advantage. Zhiyuan enjoys a very good reputation in the industry from the aspects of standardized management, quality assurance, open interaction and cooperation, and honest operation. Customers and suppliers at home and abroad are willing to cooperate with us in depth.

In terms of disadvantages, first of all, our products are relatively single and the industrial chain is relatively short. In addition, due to standardized management, the indirect cost of management is relatively high compared with some smaller enterprises. Compared with some foreign large companies, the control of tantalum and niobium resources from our company is relatively insufficient. From the perspective of resource development, some foreign enterprises are better than us.

Asian Metal: In the past few years, some new smelters have emerged outside China. What do you think are the advantages and disadvantages of smelters abroad compared with domestic smelters?

Mr. Wu: The advantages for foreign smelters are as follows:

Firstly, at the industrial chain level, foreign factories mainly provide supporting services, and orders are relatively stable.

Second, policy and market expectations are stable. Domestic policies are volatile, and external circumstances such as a trade war between China and the United States can also affect future market expectations. Foreign users tend to choose factories that are expected to be stable in the future.

Third, foreign tax costs are lower. China's 13% value-added tax, including corporate income tax and other side taxes, is too high, leading to a loss of advantage for Chinese products.

Finally, foreign factories may be slightly more automated than Chinese ones.

At the same time, foreign smelters will also have some disadvantages. First of all, many countries have no advantages over China in terms of industrial supporting equipment (such as the supply of auxiliary materials) and the cost is higher. Secondly, due to the high automation of production line and the high price of related equipment, the total investment of the same project is relatively large, and the depreciation cost in the early stage is also relatively high. Thirdly, the labor cost is relatively high, but the comprehensive operating efficiency is relatively low.

Asian Metal:What is the company's future development plan or the dominant product in the later period?

Mr. Wu: Firstly, on the basis of strengthening and refining, we would appropriately expand the scale of smelting, strive to maintain the first place in the production scale industry, and seek increment from the operation level, such as the production level to reach 2,000 tons, the operation level to reach 2,500 tons or more, expand the operation scale, so as to achieve healthy and sound development.

Secondly, we would optimize the product structure, increase the proportion of high purity products and increase the proportion of high value-added products.

Thirdly we would firmly expand close cooperation with downstream users and establish a win-win cooperation model. At the same time, we will also focus on the development of differentiated products. For example, we are currently preparing a metallurgical grade tantalum powder production line to meet higher quality requirements. We will control the content of key impurities from the raw materials, so that the content of impurities in the terminal products will be lower and the quality of products more stable. The project is expected to have an annual capacity of 100 tons.

Fourthly, we would like to strengthen resource development and overseas market expansion. For Chinese smelting enterprises, the development of overseas resources is always a challenge. We have certain conditions and capabilities to integrate related resources.

Fifthly, we need to link up capital markets and strengthen industrial and financial cooperation. Physical operation and financial cooperation are also the focus of our later consideration, and we are preparing for an IPO on the main board of Hong Kong.

Asian Metal: With the development of China's downstream high-precision industries, will China's domestic market demand for tantalum and niobium products grow?

Mr. Wu:I am optimistic about the future of tantalum-niobium industry. China's manufacturing industry moves to the high end, so will its emerging industries. The aerospace industry, especially the military industry, super alloy field, semiconductor industry,

communication electronics industry, emerging industries such as monitoring system and unmanned optical lens, have a great demand for tantalum-niobium products.

Asian Metal: Do you think the trade war between China and the United States will have a big impact on China's tantalum-niobium export market next year?

Mr. Wu: It has little influence on tantalum market, and the export of tantalum products has been relatively stable. The impact on niobium market will be even greater. Previously, there were small sales of niobium products with increased tariffs, but once the tariffs are reduced or eliminated, sales will increase significantly.

Zhiyuan has been focusing on tantalum-niobium industry for many years, and has a good foundation in resources, technology and customers. We are committed to creating the world's leading manufacturer of tantalum and niobium products, providing quality products and services to the society, and contributing more to the prosperity and stability of the industry.