Asian Metal: Good morning, Mr. Ying! Thank you very much for being our special guest here to share with us your opinion on the future market of cobalt. First, we would like to know what do you think about the world macro-economic environment? Do you think the economy in Europe and the US has already stepped out of recession? Or the second dip is still possible?

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Mr. Ying: Generally speaking, China's overall economic situation is OK. However, it is still hard to tell whether the economy in Europe and the US has bottomed out as there are too many uncertainties.

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Asian Metal: It seems that people feel sensitive again after the recent debt crisis in Dubai. How do you think about this crisis? Do you think there will be more small-sized countries like Dubai fall into this kind of crisis and exert devastating effects to the whole world economy?

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Mr. Ying: Comparatively, the impact of other small countries will not be so devastating as what happened in September 2008 in the U.S. financial industry, but it also shows that the overall economic recovery is not solid. China's economy is still export-oriented, the overall export from March to September were recovering steadily. However, it seems to be weakening again in October. This shows that foreign demand has not been fully recovered. Therefore, we believe the overall economic recovery is not solid enough. There will still be some relapses.

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Asian Metal: Talking of the cobalt market next year, what do you think should be people's concern besides the intensifying inflation?

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Mr. Ying: I think it is the launching of the LME future trading. It comes earlier than people had expected, and people here in China are very sensitive about this issue. The market will become more unpredictable next year as more funds will flow into this market. Seeing from the market fundamental, the supply of cobalt concentrates is sufficient; the key to the market next year is whether manufacturers will operate at full capacity and how the demand will recover. You know that how the demand in China will recover is largely depended on the situation outside, especially in Europe and the US. The economic recovery this year in China is mostly driven by the huge investment, but will the recovery continue next year will depend on the macro-economic situation worldwide.

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Asian Metal: I think so. Mr. Ying, how do your think about the supply demand situation in the current cobalt market in China?

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Mr. Ying: Personally I believe the current market is basically in balance. Although the import volume for cobalt concentrates, cobalt metal and intermediate products are very big this year, we have not seen many producers selling cheap at very low prices all the time. That is to say, most manufacturers are holding their inventories rationally and the market is also adjusting itself from time to time. The total operating ratio is about 70-80% for Chinese cobalt industry as major manufacturers are in operation while some small sized ones are processing materials for those big ones. Although it is not easy to make ends meet this year, most producers are still operating normally. There might be some companies selling cheap in small quantities at certain time, but that is not the common situation that lasts long. As far as I know, major producers already have their cobalt chloride for December fully booked out.

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Asian Metal: What about the downstream demand, especially lithium battery industry?

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Mr. Ying: I personally believe the year of 2009 still sees an increase of about 10-15% in the total demand from lithium battery industry. When the price fluctuates between RMB300/kg and RMB350/kg, cobalt is still the main material used in lithium battery. Currently we see that lithium battery producers are purchasing lithium cobalt oxide or cobalt tetroxide regularly. Although some might purchase a bit more when the price is low, the general quantity is more or less the same. At the same time, some companies might stock a bit more raw materials due to the low value of cobalt material this year, but that is not a big burden to the whole market.

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Asian Metal: Yes, that is true. Mr. Ying, what have you noticed in the aspects of technological innovation and products upgrade in Chinese cobalt industry?

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Mr. Ying: As far as I know, many factories are researching and developing cobalt tetroxide. Emphasis is placed on how to reduce costs, improve quality and enhance market competitiveness. We are now focusing on improving the quality of cobalt tetroxide and only after that will we consider of producing downstream products like lithium cobalt oxide, as the quality of cobalt tetroxide plays a key role in that of lithium cobalt oxide.

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Asian Metal: Have you started the production of cobalt tetroxide yet? I think you has told me before the trial production would start this December.

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Mr. Ying: Yes. We start trial production on December 2, that is today. We have ten production lines in total, with an output of 30tpm for each line. When the output will reach the full capacity still depends on how this product sells in the market. Our technique is different from what is mainly used by most cobalt tetroxide producers in China, as it totally relies on chemical reactions. We are still not sure whether production cost through this method will be lower or not, but it is clear that the quality stability will be higher than that of traditional methods. This is a leading technique in China but many companies also plan to do so.

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Asian Metal: Mr. Ying, do you have any plan to expand your capacity next year? What about the capacity expansion of the whole cobalt market in China?

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Mr. Ying: Whether we will expand the production capacity replies on the production situation of cobalt tetroxide. While for the whole market, it might increase a little bit next year, but I am not sure about that.

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Asian Metal: Mr Ying, do you have any other plan for next year?

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Mr. Ying: Of course we have some tentative plans for next year, but still we need to make sure of the steady production of cobalt tetroxide. IPO is the dream for every entrepreneur, and we are also thinking of this, but the key is how can you persuade people to buy your products and what is your attracting point. We are working on it now and also are gathering strength.

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Asian Metal: Mr Ying, do you have any suggestions on the import and export policies of cobalt products? What about the national policy?

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Mr. Ying: From the current policy, we can see that the government is encouraging the development of cobalt industry. The instability in cobalt market is mainly caused by purchasing without taking into consideration of the market balance, which is also normal in a market that is developing fast.

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Asian Metal: Mr. Ying, do you have any suggestions to the whole cobalt industry in China?

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Mr. Ying: I hope all companies will have a brighter future next year and earn more money and there will be fewer ups and downs in the cobalt market.

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Asian Metal: Mr. Ying, what is your prediction for the future market?

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Mr. Ying: I think the market will come to the bottom after dropping slightly. RMB300/kg will be a reasonable price for cobalt metal. For cobalt chloride, the mainstream price would be around RMB70/kg, but there might be suppliers selling at around RMB67-68/kg.

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Asian Metal: Well, Mr. Ying, thank you very much to be here and share with us some of your views on the current market. Hope your cobalt tetroxide will come to the market as soon as possible!

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Mr. Ying: Thank you!