Asian Metal：Thank you for accepting the interview. Firstly, could you comment on the current ferronickel market?

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Mr. Song: In early 2010, from January to Spring Festival, ferronickel market moved slowly, and the mainstream price of ferronickel 10%min was at 1,300-1,350/mtu (USD192-199/mtu), and the price of nickel of Jinchuan brand was at RMB140,000-150,000/t (USD20,649-221,234/t). From middle-February to middle-April, the market started to recover, and the price of nickel of Jinchuan brand increased to RMB191,000/t (USD28,171/t). Following with the strong nickel price, ferronickel price moved up, and the price of ferronickel 10%min was at RMB1,550-1,600/mtu (USD229-236/mtu). However, in late-April, bank reserve requirements increased by 50 basis points as the government seek to prevent the economy from overheating. Furthermore, the tight the monetary policy in Chinese real estate market and the economic crisis in Portugal and Greece dragged down nickel and ferronickel prices. All in all, ferronickel market was affected by the global economic development and mixed economic news, although the market kept unstable, it may not decrease greatly in the next half of year.

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Asian Metal：As we know the demand of high-grade ferronickel remained strong. In your opinion, what are the advantages of high-grade ferronickel?

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Mr. Song: Ferronickel from a product liquor solution contained at least nickel, cobalt, iron and acid soluble impurities, and the content of the impurities in ferronickel restricted stainless steel production. Moreover, if the same amounts of middle-grade ferronickel or high-grade ferronickel produce stainless steel, high-grade ferronickel production efficiency is higher. In the past years, middle-grade ferronickel price is usually higher than high-grade ferronickel price, but high-grade ferronickel price continued to move up in recent years due to the high efficiency and strong demand. Stainless steel plants are likely to purchase high-grade ferronickel as raw materials, and they are also constantly looking for suitable raw materials.

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Asian Metal：Weiye Nickel Co., Ltd. is one of the famous high-grade ferronickel producers in China, and could you give us a brief introduction to the operation condition of it?

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Mr. Song: Weiye Nickel Co., Ltd. is a branch company of Weiye New Energy Group, and we keep four electric furnaces of 22,500KWA running with an output of 5,000-6,000tpm. The current operation is ok. We supplied around 4,000-5,000t of ferronickel 10%min to Tai steel this month. We plan to expand production this year, and will start two furnaces of 22,500KWA before end of year and the output can reach 60,000-70,000tpy then. We also plan to start another six furnaces of 22,500KWA before the end of 2011, and the full capacity can reach 80,000-100,000tpy then. Furthermore, we may start to another eight furnaces of 22,500KWA before the end of 2013 if the market keeps strong. At that time, our full capacity can reach 200,000tpy. We will become the largest high-grade ferronickel producer in China.

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Asian Metal：As we all know, Shandong province centralized many ferronickel smelting, which advantageous factors attracted such many producers put up factories in Shandong? Moreover, your company kept production quite succeeds and I prefer to know how do you control the operation cost successfully?

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Mr. Song: First of all, one of the advantages is that we are nearer from Binzhou port and the transportation charge is only RMB50/t (USD7/t) delivered to the plant. Therefore, we reduced the production cost greatly. Furthermore, at present the electrical bill is RMB0.67/kwh, basically not limits power consumption. The electrical bill probably accounts for the production cost 40%. Our group has own thermal power plant, and can supply us electricity power directly. This is another superiority for us. Although Ferronickel plants such as Ningxia and Inner Mongolia are running with low power charge of RMB0.3/kwh, the nickel ore transportation is quite difficult for them, moreover there winter will be severely cold, lateritic nickel ore frozen is hard to use. Therefore the Shandong area is more suitable produces the ferronickel.

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Asian Metal：At present Chinese stainless steel produce is surplus, and the demand of stainless steel keeps sluggish, how do you comment the ferronickel supply at the moment?

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Mr. Song: At present the stainless steel demand remains weak, but following with the recovering global economy, nickel market may recover in second half of year. Most stainless steel plants in China started to purchase ferronickel as raw material to produce stainless steel currently. For example, Taiyuan Steel reduced nickel cathodes purchase, and increased ferronickel purchase, which can account for 70-80% of raw materials, and Zhangjiagang Pohang steel already purchase ferronickel which can account for 50% of raw materials. Stainless steel plants tried to find out the suitable materials to produce stainless steel, and expected to realize the profit maximization. It is sure that the nickel market influences the stainless steel a lot, and meanwhile, the demand from stainless steel also affects nickel price. We are full of confidence to the nickel product in the stainless steel domain application prospect.

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Asian Metal：There are few regulations for offers and test in ferronickel industry. In your opinion what problems are there in ferronickel industry at present, and how will the ferronickel industry development?

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Mr. Song: At present the ferronickel industry does not have the concrete standard, and there is no a designed association to regulate the market, especially the regulations for ferronickel finished products. Only some companies have their own regulations to test the products. Furthermore, ferronickel producers keep relatively independence, and most of them are reluctant to exchange the technological, everybody tried to find out the new technology by themselves, and seek the better production method for ferronickel production. I think it is disadvantageous for ferronickel development. However, there is competition in ferronickel industry, and this should be a stage which must pass through. I believe there is really a need to make regulations for the market, while it may take a long time to realize this goal now.

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Asian Metal: The supply for high-grade lateritic nickel ore in China keeps tight for the moment, and Chinese government encourages enterprise to invest overseas nickel resources. Could you tell me how do you solve the raw material supply problem, and I prefer to know if your company has the plan to invest the overseas resources?

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Mr. Song: We purchase lateritic nickel ore from a Hong Kong minerals import & export company for a long time, and the cooperation is ok. Now we purchased a part of stockholder's rights of a lateritic nickel ore mine in Indonesia. We will import lateritic nickel ore from ourselves mine in 2011. Next week we will delegate the special person to Indonesia in charge of lateritic nickel ore business. I heard that Indonesian government approved a new mining policy, saying that they should restrain the export of lateritic nickel ore. However, the new mining law is controversial in Indonesia, so I believe that the law may be hard to effective. In addition I think an investment ferronickel project in other countries is a tendency in the future, so we also considered establishing ferronickel plants in the overseas.

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Asian Metal：What is the expectation of the future market in the second half of the year?

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Mr. Song: Generally speaking, although nickel market keeps unstable currently, I hold a cautiously optimistic attitude towards the market as the demand from the steel mills will increase gradually. Nickel market is likely to become active with increasing price driven by the recovering demand from domestic and international markets and favorable economic news. In this case, nickel market will become warm in the second half of the year.

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Asian Metal：Thank you again for your support to Asian Metal!

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Mr. Song: Thanks!