Asian Metal: Firstly, thanks for your acceptance of the interview by Asian Metal. Could you please introduce the general condition of your company?

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Yang Rui: Thanks a lot. Our company is a circular economic industrial chain enterprise that mainly engages in the production as well as processing of magnesium and its alloys. Other than that, we also belongs to a sole proprietorship that has business in the fields of coal products sales, the export trade of magnesium and its alloys, electric business, logistics development, smelting chemical industry, the real estate acquisition as well as hotel operations.

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Asian Metal: As an important magnesium metal producer in Shaaxi, please introduce the advantages of your company in production and development.

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Yang Rui: Like other magnesium-bearing manufacturing enterprises in Fugu, Shaanxi, our biggest advantage is the energy and circular economy industry chain, based on Tianyu Group’s overall plan towards its own circular economy industry chain of magnesium and magnesium alloy and taking the policy of “energy saving and emission reduction” as guide to largely develop circular economy industry chain based on the production of raw coal and the deep processing of magnesium and magnesium products. Through continuous technical improvement and capacity expansion of several years, the annual production capacity of constructed projects at the magnesium and magnesium alloy circular economy industry base achieves to 45, 000t of primary magnesium ingot, 10, 000t of magnesium alloy ingot, 600, 000t of reducing slag baking-free brick, 600, 000t of semilcoke, 60, 000t of coal tar and 900, 000t of electric coal (0-50mm foam coal). The current production capacity being constructed and planned to be constructed are 5, 000t of magnesium alloy castings, 5, 000t of magnesium alloy sections, 1.2 million tons of coal washing, 600, 000t of semilcoal, 60, 000t of coal tar, 50, 000t of ferrosilicon, 200, 000t of calcium carbide as well as 2×500 MW captive power generation project. After the project fully completed, products between upstream and downstream are used as raw materials and fundamental energy mutually. Only the transportation cost saved by intermediate links will take a big role.

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Asian Metal: The price of magnesium has broken through the mark of RMB18,000/t ex works twice since 2011. What do you think are the reasons for the increase?

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Yang Rui: I think it is reasonable that the price of magnesium reaches to RMB18,000/t ex works, because the rising prices of electricity, coal ferrosilicon and salary lead the magnesium production cost. For magnesium producers, the increasing price does not bring more profit to the company.

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Asian Metal:How do you expect the price of magnesium in the rest of 2011?

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Yang Rui: It is unlikely for the price to change much because of the high production cost. If the price decreases further, more companies will stop or reduce production. As a result, the price of magnesium is probably to slightly fluctuate in the latter half of the year, but it is not likely to sharply decrease.

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Asian Metal: Do you mind informing us whether the sales focus on the domestic market or the international market?

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Yang Rui: The company focuses on the domestic market at present with some export business as well and will adjust the sales direction as the market trend.

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Asian Metal: Do you think that USD3,250/t FOB China is helpful to the development of the magnesium export as Customs has limited the magnesium export price twice since July 1st?

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Yang Rui: I think that the magnesium export price limitation is a kind of protection for the industry as the lower price is not an indication for the commodity because too low price will reduce the investment enthusiasm of the enterprises for a long time, as a damage to the industry itself. At the same time, too high price will be an obstacle for the downstream supplication to extend. Hence, a reasonable and stable price of magnesium is able to promote the industry to develop properly.

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Asian Metal: With the weak foreign market demand at present, foreign consumers are reluctant to accept the current price of USD3,250/t CIF China and make purchase. As an exporter of magnesium ingot, how to adjust the current price with export?

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Yang Rui: Apart from the global economic situation, we thought that the dim export market and inactive purchase are related with public opinions from foreign and domestic costumers. It is misunderstood that the production cost of magnesium ingot runs low in Fugu. Since the capacity in Fugu was released, consumers wanted to make purchases at low prices but they ignored that producing companies may reduce their interest and passion in magnesium industry.

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Asian Metal: The change of magnesium price in Shaanxi is becoming the wind vane for the whole market, what do you think about this?

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Yang Rui: I think, an area of 120 kilometers centralizing at Daliuta is the superiority region of Shaanxi and also the region that affects the price change of magnesium most. Based on the rich resource of coal, Fugu Magnesium started from the year of 2004 when all magnesium enterprises used the waste gas in the production of carbon to produce magnesium metal, and in 2008, the production of carbon and magnesium was officially brought into the recycling economy industry chain, gaining new advantage for the development of magnesium industry. As of 2010, the production of magnesium metal reached to 178,400t, accounting for one third of the national production; in addition, the approved capacity of primary magnesium exceeded over 540,000t with the established capacity of the material getting to 350,000t above. Seen from the above data, although Fugu launched its magnesium industry later than other producing areas, it has become the largest magnesium production base in China, benefit from its advantages in resource and energy, as well as it innovative recycling economy style and integrated utilization mode. Therefore, it is easy to understand that the change of magnesium price becomes the wind vane for the whole market as it deserves.

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Asian Metal: What’s your company’s plan for the future?

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Yang Rui: We will further perfect the magnesium and magnesium alloy industry chain, and accelerate the construction of large logistic park, driven the development of magnesium industry through the development of logistic industry. Meanwhile, we will actively look for the regional centralized development, and participate in the research of downstream products of magnesium alloy. Try out best to enlarge the application of magnesium together with other companies in this industry.

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Asian Metal: Thank you! Thanks again for taking our interview.

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Yang Rui: You are welcome!