Asian Metal: Mr. Chen, thank you for accepting this interview. Firstly, would you please to（would you like to） make an introduction of your company?

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Chen: Founded in October 2009, Hunan, Zhenhong Mining Development Co., Ltd. is a modernized private enterprise, and mainly devotes to nonferrous metal mine development with prospecting, mining, dressing and smelting. Guangxi Rongshui Wayao antimony mine and Zhejiang Zitong antimony mine have been successively developed by the company which is working at new mines’ exploitation in Xinshao, Hunan, Yunnan, Guangxi and Laos. Meanwhile, the company can operate on mining and smelting for copper, lead, zinc, molybdenum and gold with antimony as its lead products.

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Asian Metal: As a delegate of private enterprise, does the company has any advantages of extraordinary item compared with other antimony enterprises in Lingshuijiang region?

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Chen: With over 400 of staff including several functional departments such as geology exploitation, development department, technical department, managing department, financial department and general affair office etc. The company’s businesses are mainly divided into three parts: mine exploitation and smelting, wasted residue recycling and ecological agriculture.
The company is equipped to conduct not only smelting but also mining of antimony. After having successively acquired 4 mining concessions in Guangxi’s Rongshui, Zhejiang’s Zitong and Hunan’s Anhua, we acquired Lengshuijiang Xiangzhong Chemical Plant in September, 2010 and registered Hunan Metallurgy Science and Technology Co., Ltd in November, which is a wholly owned subsidiary of Hunan Zhenhong and mainly produces antimony ingot products and does comprehensive usage of SO2 emission and arsenious alkaline wasted residue.

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Asian Metal: It is known that Mr. Chen has been in antimony market for over 20 years after joining work in 1980s, and as an expert of mining, could you give us an overview of current antimony ore industry and antimony ore processing enterprises?

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Chen: Antimony ore could be divided into sulphide ore and oxidize ore, while the sales of the latter one are relatively tough, because only a few smelting plants can process oxidize ore and the former is widely sold in current market. Recent quotation for antimony concentrates 40%min kept at RMB420-430/mtu VAT excluded or RMB530-540/mtu VAT included, while the processing costs are about RMB15,000-16,000/t, so it's not easy for smelters to gain profit more than RMB2,000 when produce one ton of antimony ingot. The market has been on downward trend since Q3 of last year, and most antimony processing enterprises are suffering losses.

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Asian Metal: Antimony ore imports have kept increasing in China in recent year. With antimony resources exhausting in China, many mines outside of China have started exploitation due to increasing Chinese demand for raw material, thick profit brought by rising antimony ingot prices. We know that your company imported large amount of antimony ore from Kyrgyzstan and Myanmar, but how to avoid the risks of large deviation of import test results?

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Chen: Different institutions have different sampling methods, which are the main reason for large deviation, but we usually depend on our own test result. To get an accurate test result, we conduct cluster sampling by selecting spread samples of crushed ore every one meter. For instance, 5t of sampling should be taken from 300t of ore for testing, and the deviation could be within 5%. Compared with some famous international testing organizations, i.e.: SGS, our results are much more accurate. As samples are taken from various places and the test is required to be finished within a short time, deviations are unavoidable for results that come out from those famous testing organizations.
The subjective reason for losses is that suppliers cheat. According to my experiences, some foreign suppliers prefer to put high-grade materials on the top and bottom while low-grade in the middle layer of samples to cope with inspection. Hence, more samples from different levels should be chosen during sampling inspection.

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Asian Metal: Demand for antimony products from downstream market keeps soft and some end users have decreased their operation rates by 40-50% as global economy is slow. In addition, some antimony products producers stopped production due to environmental check combined with price decrease. How long will this situation last and what is your opinion on the market outlook? What do you think of the current demand for antimony?

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Chen: Generally speaking, antimony prices are likely to drop further but with limited room. The best expectation is that the price of antimony ingot 99.65%min keeps at RMB60,000/t VAT excluded or RMB70,000/t VAT included ex works, while the bottom should be around RMB50,000/t ex works VAT excluded. If prices drop below this level, some producers or mines will have to stop production due to negative profits.
As you have said, many producers keep low operation rates as economy continues to decline. Global demand for antimony ingot is expected to be around 80,000t this year as end users have reduced their consumption due to shrinking demand; while the figure was around 150,000t in 2010, which reached the highest level, symbolizing that demand has decreased by around 50% after one year.

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Asian Metal: It is reported that Zhenhong Mining project under construction at present will put into production by the end of this year, with 15,000t of annual capacity. However, domestic producers such as Jiutong Antimony, Zhazixi Antimony and Huaxi Antimony also expand their output at the same time. Whether your determination depends on strong confidence in the future market or just follow suit?

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Chen: Continuous integration policies from mining to antimony ingot smelting have been carried out in Hunan's Xinhua and Yiyang, Guangxi and Guizhou province since smelters in Lengshuijiang area started environmental-protection check-up on March 25, 2010. Only enterprises that hold mining rights can live longer in this field. I have mining rights of four mines with one in Rongshui, Guangxi province, one in Zitong, Zhejiang province and two in Anhua county, Hunan province, laying firm foundations for our development.
In addition, enterprises with large capacities and mining rights will monopolize the market as this industry steps into right track after reshuffle. Antimony prices are sure to maintain at a high level. As a kind of rare resources which is scarcer than rare earth, antimony cannot be recycled. Considering its scarceness, I'm quite confident of the future market.

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Asian Metal: Thank you again for accepting this interview and wish you great success in your business.

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Chen: Thank you and please accept my good wishes to Asian Metal.

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