Asian Metal: Good day, Mr. Tang. Thank you for accepting the interview. Firstly, please review the cobalt market in the past days of 2010.

---

CEO Tang: From our points of view, the trend is oversupplied. We think that it is a long-term rather than short-run tendency. Cobalt price rising in the first half of the year is mainly attributed to the investment of Chinese participants. Under the situation of LME launched cobalt metal into the futures market, Chinese participants imported too many cobalt concentrates. However, futures trading is only a way of transaction and it has no essential effect on the price. If the fundamental of demand and supply does not change, it is difficult for the price to turn around, so the price falls right now. From the side of demand, cobalt has no new use. In China, a large part of cobalt is consumed in lithium battery industry. In the future, when energy storage battery, power battery develop maturely, demand for lithium battery will be great, but it has little to do with cobalt. From the sustainable path it is a consensus in this industry that the powder battery and energy storage battery is not likely to use lithium cobalt oxide.

---

Secondly, the trend of lithium nickel manganese cobalt oxide replacing lithium cobalt oxide of laptop is clear. We can see that the trend is going on in South Korea and it is the same tendency in Japan because of the fierce competition between South Korea and Japan. Lithium battery producers try to replace low-end lithium cobalt oxide with lithium nickel manganese cobalt oxide. There are competitions among battery producers: When a market participant lowers the cost, other participants have to reduce costs too, otherwise there would be no competitive advantage for them. The trend will lead to a part of lithium cobalt oxide replaced by lithium nickel manganese cobalt oxide and lithium manganate, so the market of lithium cobalt oxide will not grow so fast as before. I do not believe that demand for lithium cobalt oxide from lithium battery sector will increase dramatically and it is pretty good to maintain the previous market share. Moreover, demand for cobalt from pigment, alloy industries does not increase much. On the other hand, there are many profits for cobalt concentrates mining companies to sell at USD13-14/lb, so mining corporations will not slow down the pace of mining. Therefore, the supply will increase, which results in the imbalance between demand and supply.

---

Asian Metal: Historical data can be as a reference to summarize the law of the market. Right now, most participants care about the market situation in the second half of the year. Please tell us your expectation of future market of cobalt:

---

CEO Tang: Both inventories of raw materials and finished products are high in lithium battery market. I think that cobalt price will fall in the second half of 2010 in general. Cobalt metal price may rebound after it drops to around USD16/lb in the short run, but I do not believe the price will go up drastically. I forecast the price will rise by about 20%, and that’s to say about USD19.0/lb, but it is difficult to get to USD22/lb in the first half of the year. I believe that cobalt metal price will be below USD20/lb in the second half of this year.

---

Asian Metal: The replacement of lithium iron phosphate and lithium nickel manganese cobalt oxide for lithium cobalt oxide is an tendency. Lithium iron phosphate is still in a R&D phase and not in mass production phase. At present, lithium cobalt oxide is still the main cathode materials of lithium battery. From May, lithium battery industry started to weaken and it is in the off season right now. In addition, Chinese government hit the development of emulational mobile phone, so most of lithium battery producers cut their outputs. What about your view about the situation?

---

CEO Tang: In the long run, the proportion of lithium cobalt oxide will keep declining. We believe that the consumption of lithium cobalt oxide will not decrease in the next one to two years, but there will be no dramatically increase. The proportion of lithium cobalt oxide of cathode materials of lithium battery decreases faster in Japan and South Korea than that in China. The technology in those countries is advanced than that in China and producers pay more attention on the use of functional materials, so the pace of replacement lithium cobalt oxide with other materials is faster.

---

Asian Metal: Next, I would like you to talk about the situation of inventory. Participants in China are all concerning about the high stock in Chinese cobalt market. China imported 181,000t of cobalt concentrates in the first half of the year, and the volume is about 12,000 metal tons calculated by 7% cobalt content, which is almost enough for a year’ consumption in China. It is predicted that if China stop importing in the following one year’s time, cobalt market can move smoothly. What do you think of this matter?

---

CEO Tang: The price rising in the first half of the year was mainly attributed to China’s investment and there are high inventories for all metal products in China. China released too many loans last year. Moreover, Chinese enterprises buy cobalt concentrates in large quantities. Seen from the statistic of imported cobalt concentrates from January to June, China has imported more than 180,000t, while China imported about 150,000-160,000tpy in total before 2008. That’s to say, if China stops the import of cobalt concentrates from July 1, the supply of cobalt concentrates is abundant, and it is only the import of cobalt ore. At present, the cobalt resources diversify, and there are white alloys, crude cobalt carbonate, cobalt hydroxide, etc. except cobalt concentrates. China created a lot of virtual demand by this way. Therefore, cobalt metal price went up to above USD20/lb, from USD17-18/lb early this year. After LME launched cobalt metal into the futures market, the cobalt metal price did not continue to rise as people had expected because of the high stock.

---

Asian Metal: We know that Reshine is the second largest lithium cobalt oxide export enterprise in China. I looked up the export data of lithium cobalt oxide in the first five months in 2010, finding that the export volume kept rising on a month-on-month basis. Moreover, more than 90% of lithium cobalt oxide was exported to South Korea among the total export volume. Please tell us your viewpoint about the export market of lithium cobalt oxide in the second half of 2010.

---

CEO Tang: From the global perspective, Chinese cathode materials manufactures take place of the producers in other countries and the export volume increases from China does not mean how much the total consumption rises. Demand from Chinese lithium cobalt oxide producers increases, and it means that demand from other countries decreases correspondently. Manufactures in South Korea and Japan are developing traction battery, and lithium cobalt oxide production will be transferred to China. Take Sanyo for example, whose lithium cobalt oxide is mainly supplied by Japanese manufactures before, is transferring suppliers to China. Therefore, the export volume of Chinese lithium cobalt oxide increases. We anticipate that Reshine will export 1,500-2,000t of lithium cobalt oxide in 2010 and we plan to export 130tpm in the second half of this year. I predict that the total volume of the export of Chinese lithium cobalt oxide will be about 4,000t in 2010.

---

Asian Metal: What advantage of Chinese lithium cobalt oxide?

---

CEO Tang: Compared with Japanese lithium cobalt oxide producers, we have no advantage in technology. On one hand, there is the cost advantage for Chinese producers. On the other hand, there is complete industrial chain of lithium cobalt oxide: we produce lithium cobalt oxide with cobalt concentrates as raw materials to produce cobalt chloride and then cobalt tetroxide to lithium cobalt oxide at last, while foreigners take cobalt metal as raw materials.

---

Asian Metal: After the economic crisis, cobalt market improved in 2009. It is generally believed that cobalt market would keep picking up in 2010, so many factories have the plan of expanding production capacity. However, the debt crisis cast a shadow to cobalt market. For the time being, most producers are reducing their output. What’s your opinion about this?

---

CEO Tang: I think that cobalt market will rebound in August. Producers will raise their price because of their high cost and some time later the price will fall again as there is no strong demand to support. The main reason why Chinese cobalt producers expand their output is that the current global cathode materials are being transferred to China and Chinese cathode materials accounts more and more market share. Furthermore, the development of lithium nickel manganese cobalt oxide and lithium manganate is fast and the resources of manganese and nickel are sufficient in China. Anyway, we should expand the output according to the demand to avoid blind expansion.

---

Asian Metal: Whether we could say that the higher of cobalt price, the more obvious for lithium nickel manganese cobalt oxide to replace lithium cobalt oxide.

---

CEO Tang: This may be the situation in China, but participants in Japan, South Korea pay more attention on the functional use and they manufacture high-end lithium battery. It needs a long time to develop the materials, and the conversion costs are relatively high. Therefore, we can not say that when cobalt price is low, the replacement of other cathode raw materials for lithium cobalt oxide is weak.

---

Asian Metal: At the end of 2009, an important reason why most participants were optimistic about the cobalt market in 2010 is that they believed that the futures trading of cobalt metal will bring more vigor to cobalt market. We can see that the futures trading of cobalt market on LME is not so active as we have anticipated. What do you think about this?　

---

CEO Tang: Futures trading is only a way of transaction, and it is featured with the functions of the price discovery and hedging. However, it can not create demand and we can not be too optimistic about it. Before LME futures started, market participants had bought cobalt metal in large volume in advance. At present, the futures transactions are inactive.

---

Asian Metal: As one of the biggest lithium cobalt oxide producers in China , what is the main characteristics of Reshine?

---

CEO Tang: Reshine mainly focuses on product diversification and high-end technology. At present, we attach more importance on the development of foreign market. The export volume occupies about 50-60% of our sales in 2010, and we make efforts to achieve 80% in the future. We established company in May 2001, and we has been focusing on new product development and quality management since then. Quality management are concentrated in stability and purity.

---

Asian Metal: We know that the competition among manufactures is intense. I would like to know how Reshine can maintain the leading position in China and improve market competitiveness? What is the planning of Reshine in future?

---

CEO Tang: Every enterprise has its own strategy. We adore the strategy that we do another cathode material after we do one material well. At last, we would like to achieve the goal of product diversification. In the future, we will focus on the development of cathode materials with low cobalt or non-cobalt. Our target is divided into different stages. We make effort to do high-quality lithium nickel manganese cobalt oxide and lithium manganate in the coming two years.

---

Asian Metal: Currently, people show much interest in lithium iron phosphate and Chinese government adopts many policies to support the development of this kind of cathode materials of lithium battery. However, the raw materials is still at the research level at present. How do you think about this? Does Reshine plan to invest more on this material?

---

CEO Tang: Lithium iron phosphate is not mature enough right now and it is not at large-scale production level. It still faces many obstacles. Lithium iron phosphate is a modified material with a feature of bad consistent. I believe that whether lithium iron phosphate can be achieved mass production depends on two aspects: consistency and cycle life. After we solve the two problems, we need to consider the safety and rate of discharge. Battery cost accounts for about 50% of electric motor car, so I think that there is blindness of the investment on lithium iron phosphate in China.

---

Asian Metal: Moreover, I would like to ask some questions except for the market. Do you choose the profession right after you graduated from university? Why do you choose this one and do you have some recommendations to people of the same profession?

---

CEO Tang: I was not in this field once after my graduation. In 2001, all lithium cobalt oxide was imported from foreign countries, and we had the intensions of doing it by ourselves. The industry just began to spring up at that time and we seized the opportunity. In fact, I think that the points are strategy and insistence. If you have the right direction and methods, what you need to do is coming towards the goal.

---

Asian Metal: If we compared the development of enterprises to the growth process of a person, which stage of Reshine is in?

---

CEO Tang：I think it should be 15-16 years old of a person. Chinese lithium battery industry is also relatively young.

---

Asian Metal: I see a vibrant Reshine. Thank you again for the interview and I hope Reshine realize the aim of being the first three cathode materials of lithium battery manufactures globally as soon as possible.