Asian Metal: Mr. Jiang, it is honored that you accept our interview. Your company has long been focusing on the development of ferronickel and ferrochrome industry, so could you please give a brief introduction of the current operation status of your company?

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Mr. Jiang: Our company is a corporate enterprise attached to Jugang Group. We focus on resources and combine mineral smelting, production and sales of stainless products together whilst our main products include ferroalloys, steel, drawn tube and cold roll. We began to import lateritic nickel ore in 2007 but slowed down in 2008 as a result of the economic crisis; however, we have made considerable progress in purchasing the material and have a detailed and effective plan for the supply of raw materials in the future. In addition, we will put ferrochrome project into production in the coming year and launch ferronickel project at the same time. We have completed the main body of three 12,500KVA furnaces, which will begin to produce ferronickel 10%min in Feb., 2011 with an output of 3,000tpm in full capacity.

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Asian Metal: For the moment, the supply of raw materials is still an important factor that restricts domestic smelters as the supply of high-grade lateritic nickel ore has long been tight, so which ports do you use to transport the material and how are the ports ?

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Mr. Jiang: Our company is located in Shouning County, Fujian Province and close to Baima port, which is located in Xiabaishi Town, Fuan City. The draft of the port is relatively shallow at 3,000t and can only dock 5,000t cargo ships, so we usually dock the ships at anchor stations and transport raw materials to the port with small vessels. In general, the transportation of the material is convenient.

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Asian Metal: As the supply of high-grade lateritic nickel ore keeps tightening, it will be a great advantage if you have mines of your own. So how does your company handle the supply of raw materials and what’s your plan for purchasing nickel ore in the future?

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Mr. Jiang: We have two-hand strategy right now. We plan to invest in Indonesia to exploit mines and secure resources from the source as the long term development of ferronickel enterprises asks for self-run nickel mines. Meanwhile, we plant to order future goods and purchase spot material from other suppliers. With the two-step strategy, we can conclude inter-trade deals as well as exploit mines to secure the material. Therefore, we might supply the material to other ferronickel enterprises in immediate future, all things are equal.

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Asian Metal: For the moment, the strong demand for high-grade lateritic nickel ore leads to the tightening supply, however, it is difficult to conclude sales of middle-grade lateritic nickel ore. As a result, the price gap between the materials gets more and more evident. Do you think the situation will last and are there any ways to improve the situation?

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Mr. Jiang: The demand for 1.5-1.6% lateritic nickel ore was strong before 2008, when the price of nickel was at RMB450,000/t. At that time, producers could still make money to produce 4-8% ferronickel with middle-grade lateritic nickel ore as nickel prices skyrocketed. However, the current of nickel price is only 1/3 of that before 2008, producers can only gain marginal profits with ferronickel produced with middle-grade lateritic nickel ore, so they are unwilling to make purchases. At the moment, many producers are seeking new technology to produce high-grade ferronickel with middle and low-grade lateritic nickel ore. I believe that middle-grade lateritic nickel ore will be popular among producers in future due to the advancing technology.

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Asian Metal: It is said that high-grade lateritic nickel ore is secured by Korean, Japan and European countries, it is difficult for China to import the material. So what’s the reason for the situation and can we find a way out?

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Mr. Jiang: Japan, Korean and countries in Europe started early in ferronickel industry and they mainly purchasing high-grade lateritic nickel ore to produce ferronickel 30%min at high profits, so they are competitive in securing the material. However, I expect Chinese in Indonesia will consolidate to impact on the market and gradually become competitive in securing the material.

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Asian Metal: Lateritic nickel ore is of different qualities at the moment in Philippine and Indonesia, so do you have some suggestions for Chinese buyers ?

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Mr. Jiang: Some problems do exist on Philippine and Indonesia market and we can hardly guarantee the quality of the material. What I can tell is to keep cautious with the quality of lateritic nickel ore and keep away from speculation.

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Asian Metal: The policy of energy conservation and emission reduction and closing down backward production facilities have some impacts on ferronickel market. So what do you think of the policy and its impacts on Fujian market?

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Mr. Jiang: The policy will surely benefit the nation and the people and the state will keep on implementing environment friendly policies. We invest a lot to protect the environment and improve the equipments and try hard to meet government’s requirements. In addition, the local government pays special attention to our project and the power limit policy has little impact on our production.

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Asian Metal: For the moment, the competition in ferronickel market is fierce and how do you manage operating cost effectively?

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Mr. Jiang: To secure lateritic nickel ore should be given primary importance among priorities in the production of ferronickel; we can manage operating cost effectively if we can obtain cheap material of high quality whilst other expenses such as labor cost and power cost are relatively stable.

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Asian Metal: Some stainless plants begin to produce ferronickel while some ferronickel plants also begin to produce stainless products, so what do you think of the form and how will ferronickel plants develop in the future?

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Mr. Jiang: It will be a new trend and also appropriate and effective to cut the operating costs in this way. However, there are few domestic enterprises with such strength to operate on both upstream and downstream market. More and more ferronickel projects will be put into production in 2011 and the industry will face a turning point with risks and opportunities. Besides, the government will unveil related inspection standards to guide the industry and the market will experience positive changes in various ways in 2011.

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Asian Metal: What is your outlook for the lateritic nickel ore market and ferronickel market in the early half of 2011 ?

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Mr. Jiang: The overall market will warm up, at least in Q1 next year. China has entered the interest-rate rise cycle, which will have some impacts on the market in the long term. The demand for ferronickel from steel plants keeps increasing, so we are optimistic with the market in the early half of 2011.

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Asian Metal: Thanks again for your support for Asian Metal.

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Mr. Jiang: Thank you.