Asian Metal: Good afternoon, Mr. Zhang. Thanks for accepting our interview. Could you please share your opinion on micro-economy firstly?

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Mr. Zhang: Although the global economy seems to have touched the bottom and sees some recovery, this does not indicate the economic crisis has past. The second recession may strike the economy. I believe at least in the coming two years, the economic situation in America and West Europe is difficult to witness any significant improvement. Meanwhile, the economic situation in Japan is serious. Brown fused alumina market relies on the export market heavily. Therefore, if world economy recovers too slowly, the demand for brown fused alumina will not improve. Meanwhile, overcapacity is still one of the biggest problems in the abrasive industry. Our government has carried a series of regulations to get rid of such obsolete equipment and technology. However, as far as we are concerned, some of these are still running.

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Asian Metal: Yunwu is one of the most influential companies in abrasive industry. Does your company have any plan of upgrading in 2010?

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Mr. Zhang: We are going to add a new program in 2010, putting a kind of additive into brown fused alumina. In this way, the product performance can be increased and the power consumption will be decreased. Now, we are buying the raw material and the new program will come on stream in March.

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AM: How is the operation condition of your company?

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Mr. Zhang: We are running pretty stable. We mainly supply the material to our long-term buyers.

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AM: Do you have any suggestion to our policy-makers?

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Mr. Zhang: Abrasive industry is a small industry but it is indispensable, but the government does not pay much attention on us. Moreover, the government has been emphasizing to restrain the development of high-power consumption industry, but as far as I am concerned, there is no definition for high-power consumption. Brown fused alumina industry is usually considered as the high-power consumption industry, but I do not think so. Brown fused alumina production consumes less power than ferroalloys and yellow phosphorus. Meanwhile, brown fused alumina industry is also considered as the high-pollution industry. I do not think it really is. During the production of brown fused alumina, no poison gas will be emitted.

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AM: Do you have any advice to other companies in this industry?

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Mr. Zhang: I think there should be a chance for “reshuffling of the cards” in the market, that is re-arrangement or better still, restructure. There are just some dispersed smelters but few big ones. The scattered ones are surely lacking in competitiveness. If the government could guide the rearrangement and the enterprises could combine or merge freely, the anti-risk ability of the enterprises will be improved in that way.

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AM: what do you think about the brown fused alumina market this year?

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Mr. Zhang: I do not think there will be significant improvement in brown fused alumina market this year. Although stimulated by the higher production cost, the price of brown fused alumina has increasingly rendered the profit margin for the material to remain limited. As we approach the raining season in Guizhou, the power cost will decrease and the price of brown fused alumina may go down accordingly. The price battle will show up from time to time when the supply is abundant.

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AM: what do you think about the market outlook in the short term? Do you believe it the price will keep creeping up?

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Mr. Zhang: I do not believe it will. I think the price of the material has already touched the ceiling.

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AM: We understand the Guizhou Abrasive Association (GAA) was established on November 18th. Could you please introduce us the GAA?

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Mr. Zhang: The main purpose of establishing the Guizhou Abrasive Association is to boom the abrasive industry in our local area. We are going to build a Research and Development department and make every effort to invent some new products in brown fused alumina industry.

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AM: Just as you mentioned, The GAA is going to establish a research and development center. I am curious when the center will be set up?

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Mr. Zhang: We have reached a consensus that the research department will be established in the first half of 2010, organizing the experts from all over the country in this industry to tackle key problems. We are confident that the industry will thrive with our continuous efforts.

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AM: Thanks again for accepting our interview!

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Mr. Zhang: My pleasure!