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    Chinese environmental policy becomes strict, which causes increasing production cost from tantalum and niobium smelters
    ----Interview with Yi Chen
    General Manager
    Hengyang King Xing Lifeng Materials Co., Ltd.
    Hengyang King Xing Lifeng Materials Co., Ltd. was set up on December, 1993, which was one of the first plants engaged in tantalum and niobium production. It is a private sino-foreign joint venture which owns many core technologies on the production of tantalum oxide, niobium oxide and potassium fluotantalate. The main products of the company are tantalum and niobium related oxide and compound, electromagnetic and lighting chemical new materials.

    Asian Metal: Hi Mr Chen, Thank you for taking part in this interview. Could you please give us a brief introduction about your company?

    Chen: Our company mainly produces tantalum and niobium oxide and related compound. In order to satisfy the new environmental requirements, we are upgrading environmental protection machines and still in trial production stage, with an output of around 20tpm. The annual production capacity will reach 700-800t after we return to normal production in the future.

    Asian Metal: As the Chinese environmental policy becomes stricter these years, is there any influence on the production for tantalum and niobium smelters in China?

    Chen: The new environmental protection policy has a big influence on the domestic smelters. For example, it needs to invest a lot of money, time and efforts in upgrading new machines and new production lines, consuming qualified raw materials and so on. For the increase for environmental protection cost in the total production cost, tantalum oxide and potassium fluotantalate production cost increases by around 1.5% and niobium oxide increases by around 6-7%.

    Asian Metal: In order to satisfy the new environmental protection requirement from Chinese government, does the plant take any actions?

    Chen: We invest a lot of money and efforts upgrading our machines and production line. For example, we have already invested more than RMB10 millions in wastewater treatment. It is uncertain about the time and money we will continue to invest to fix the total production line. In addition, we are cautious in choosing raw materials. We prefer to consume high purity tantalite and columbite instead of tin slag or low grade ore as the latter would cause increasing environmental cost.

    Asian Metal: The increasing environmental protection cost will be the common issue faced by Chinese tantalum and niobium smelters. Can you introduce some details about the adding cost for the environmental protection?

    Chen: First, we see adding cost in processing ores and dealing with solid waste. We need to use around 3-4t of hydrated lime (RMB800/t) when we process 1t of the tantalum ore, so the adding cost would be RMB2,400-3,200/t. We also need to transport our solid waste(Transportation fee will be RMB100/t), so the adding cost will be RMB800-1,000/t.
    At the same time, the new policy requires higher degree of automation in waste gas treatment. In the past, we just need to train the workers about the related operation procedures. However, we need to add new machines to process it with a total investment of RMB10 millions and depreciation cost is around RMB2-3 millions per year. In addition, upgrading for old machines into new machines also need extra cost. One old machine price would be RMB10,000-20,000 while one new machine price would be around RMB30,000-40,000.

    Asian Metal: Do you raise the processing fees for tantalum oxide and niobium oxide? How about the increasing amount? Do you think that the processing fee will continue to increase in the future?

    Chen: Influenced by increasing environmental cost, we raise our processing fees for tantalum oxide and niobium oxide. The processing fee for potassium fluotantalate is RMB105/kg, up by RMB15/kg from the previous level at RMB90/kg. The processing fee for tantalum oxide is RMB180-190/kg, up by RMB20-30/kg from the previous level at RMB160/kg. The processing fee for niobium oxide is RMB105/kg, up by RMB10/kg from the previous level at RMB95/kg. As our output has not reached scale production and there are some uncertain factors about the investments on the environmental protections, it is hard to see whether we will increase the processing fees further in the future.

    Asian Metal: What is your future development plan or focus in the future?

    Chen: Under the strict environmental protection policy in China, the most important issue for us is how to survive and then we will consider finding more cooperators, expanding our business range in the future. For our company, we focus more on the production for tantalum and niobium products. We aim to ensure the quality and supply stability of our products.

    Asian Metal: As metallurgy industry is a traditional heavy industry with big pressure for environmental protection, how can you balance the contradiction between normal production and higher requirement for environmental protection?

    Chen: The key point is always to be how to produce under new requirement for environmental protections from the Chinese government. We will alter our production technology to satisfy new policy and sometimes we even reduce our actual output to make sure that all of our productions can meet the specification.

    Asian Metal: Influenced by the Chinese environmental policy, the output from domestic tantalum and niobium smelters reduced in H1, do you think the output will increase in H2?

    Chen:For our own situation, our plant resumed production in April and the total output was around 60t of tantalum and niobium oxide in H1. As we are still in trial production and cannot reach normal production level, I predict that the output in H2 will not see big change.

    Asian Metal: Could you introduce us something about your plans how to face the new challenge under new environmental protection policy? Do you think the Chinese tantalum and niobium industry will face a new shuffle?

    Chen: Influenced by the new environmental policy, Chinese tantalum and niobium industry will be sure to face a new shuffle in the future. Some small and middle-sized plants which cannot satisfy new requirement for the new policy will be closed. Other plants prefer to enlarge their production capacity to reach better scale production and release the big pressures for increasing environmental protection costs. In addition, the raising industry standards and barriers to entry will prevent new plants from producing in large quantity in a short time. The older plants also face problems in upgrading machines and production lines. According to different environmental protection policy and requirements, some plants also face further risks in relocation and shut-down. In summary, the most important factor for tantalum and niobium products prices is the price for raw materials instead of processing fees. As a result, how to balance the purchasing cost for raw materials and sales prices for downstream prices will be a key topic for Chinese smelters in the future.

    Asian Metal: Thank you for granting us this interview. We wish a better future for your company.

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