Asian Metal: Hi, Mr. Yuan. Thank you for accepting our interview. Could you please introduce the production and sales of the mine in your company?

Yuan: The production of tantalum-niobium ore of our mine is stable at present, and the output is less than the normal level due to low grade of raw ore. The mine produces around 4tpm of tantalum oxide (100%), which cannot meet the demand from the market which needs about 5-5.5tpm of the material from us while sees insufficient supply. Therefore, the group has formulated the policy of unity marketing and supervision to confirm the supply for enterprises of the group preferentially and avoid the influence of the approval of EICC as well as realize the rule of framework supply. In addition, we also insist on the cooperation with strategic partners of large-scale and state-owned enterprises like Orient Tantalum Industry Co., Ltd., Zhuzhou Cemented Carbide Group, Guizhou Xinyun Electronic Company with the premise of meeting demand for enterprises of the group. However, we cannot meet all requirements of inquiries due to limited output.

Asian Metal: How does your company offer tantalum concentrate and what is your expectation of international ore prices in the second half of the year?

Yuan: We offer tantalum concentrate according to bids from clients and offers from other enterprises, and international ore prices guidance from Asian Metal is also helpful for us. The price gap between standard ore and non-standard ore will enlarge if EICC will continue to inspect the legality origin of ore, and mainstream prices of legal ore will stay at USD120-125/lb. Mainstream prices of standard ore will be unchanged despite that the end market of tantalum-niobium ore does not perform well.

Asian Metal: What is the proper price of tantalum concentrate for you based on costs of mining, beneficiation and smelting? What do you think about international ore prices amid firm prices, especially those of qualified ores?

Yuan: The transaction prices of our tantalum and niobium ore is not only connected with all the cost of mining, beneficiation and smelting, but also considering the current international tantalum concentrate prices and the relation between supply and demand. The assessment index price of tantalum concentrate of our group is RMB19,000/mtu (USD117/lb), so the price of RMB20,000/mtu will be profitable, while rationality of prices will not be seen as we set prices to guarantee the relation between production as well as supply and demand but not consider profits with so many external factors, which is same as prices of international ores.

Asian Metal: On current supply and demand of ores, what do you think about the balanced level of international and domestic prices?

Yuan: The output of our mine is low, which can only meet an emergency for domestic market, thus we do not comment on international and domestic ores prices, while everything real is rational, and prices of tantalum ore have not kept at a fixed price for a long time, but kept dynamic balance for many years.

Asian Metal: It is said that many domestic large-scale companies and major international producers begin to purchase low grade ores from Southeast Asia due to tight supply in international market. What is your plan to face the tightness of supply and who decides your output?

Yuan: Our Company's expansion plan has been considering for a long period, but due to many kinds of influences, the plan was not carried out. Our expansion revamp may see trail production on Aug 1, and the output of tantalum ore will increase to 150tpy of tantalum oxide if everything goes well, which will meet a great part of requirements from one or two domestic middle and large-scale enterprises. The expansion revamp plan was also made by the group company, after considering the market demand and our output capacity.

Asian Metal: What do you think about demand for tantalum from downstream market?

Yuan: It is reported that the industrial chain of tantalum-niobium ore does not run well at present. Mines have profits, while hydrometallurgical enterprises cannot make profits and end smelting and processing enterprises see marginal profits, and downstream market of tantalum is experiencing weak supply and demand, which is may caused by double-dip recession of European economy and slow recovery of US economy. The whole electronic products consumption is dim, while demand for the components of electronic products keeps sluggish, while the major application for tantalum metal is in the electronic industry. As a result, affected by the dim macro economy, the tantalum downstream market is predicted to go slowly.

Asian Metal: Many processing plants of tantalum-niobium had came on line in China in 2012, and existing factories also continued to expand production capacity and output as well as production lines of new products. As far as we know, there were several companies halting production temporally because of lacking raw materials in H1 this year, and do you have any suggestions for domestic tantalum-niobium processors as a supplier of raw materials?

Yuan: We think that the Chinese tantalum-niobium industry depends on import for raw material purchases and product sales, and the raw materials supply and end products consumption are limited in local market, players should be cautious about getting into the industry or expanding production capacity.