Asian Metal: Mr. Yang, thank you for accepting our interview. Would you please first give us a brief introduction of your company?

Mr. Yang: Guangdong Dabaoshan Mining Co., Ltd. is located in Shaxi, Qujiang, Shaoguan. In May 1958, we started to build our mine which went into operation in October 1966. We became a limited company after the modern enterprise system reform and are currently affiliated with Guangdong Rising Assets Management Co., Ltd. As a state-owned and solely-invested mining company, we mainly engage in the exploration, mining and dressing, comprehensive utilization and processing of mineral resources as well as the sales of mineral products. Dabaoshan Mine is a massive polymetallic mine with a history spanning some 1,000 years and is a major part of the Nanling Metallogenic Belt. The mine is rich in mineral resources such as iron, copper, sulfur, lead, zinc, molybdenum and tungsten, and associated ore which can be comprehensively utilized. Within its mining claims, there are estimated to be 400,000 tonnes of copper metal, 350,000 tonnes of molybdenum, 50,000 tonnes of tungsten metal, 210,000 tonnes of lead and zinc, 19 million tonnes of sulfur ore and 2.06 million tonnes of iron ore. In addition, according to the on-site explorations conducted by foreign and domestic geological experts, there still exist considerable amount of mineral resources within its mining claims, with promising potential for prospecting. After a technical upgrade in 2017, the ore processing capacity of our dressing plant reached 7,000tpd, and the current processing capacity has ramped up further to 10,000tpd through years of continuous technical innovation. According to preliminary statistics, our copper production exceeded 14,000 tonnes in 2020.Additionally, in 2012, we became one of the first 40 demonstration bases for the comprehensive utilization of mineral resources in China, and the only one in Guangdong, approved by Ministry of Land and Resources and Ministry of Finance due to our advantages of resources and reserves and other strengths.

Asian Metal: What's the future development plan for the company? Is there any plan for expansion or production ramp-up?

Mr. Yang: We do have a plan and are required by the parent company to expand production but there is no specific scheme yet mainly as we are now at the critical stage of enterprise restructuring. For mine expansion there are two options. One is that we would build a new dressing plant with a daily ore processing capacity of 10,000t if our assets are successfully included in the listed company of our parent company through which we obtain the funds needed. If the first option doesn't work out, we will reclaim our old dressing plant which has a daily ore processing capacity of 3,000t with the lease term to end in 2022, and we will make upgrades to the plant to try to increase its annual production capacity to 5,000 metal tons of copper concentrate.

Asian Metal: As copper smelting capacity surges in China, there is increasing demand for domestic copper concentrate from smelters, along with the gradually higher price coefficient. Do you think there is still room for the price coefficient of domestic copper concentrate to rise in 2021?

Mr. Yang: In recent years, China's copper smelting capacity was clearly growing faster than mine production capacity, and it is also the case from a global perspective. Public data showed that China will see new copper smelting capacity of 640,000t in 2021, and with further release of new capacity, the supply of copper ore is expected to remain tight next year. Based on the agreed 2021 TC benchmark for imported copper concentrate, there is still room for the price coefficient of Chinese domestic copper concentrate to inch up, but the rise is subject to the "tug of war" between mines and smelters as it is essentially a question of how to get a bigger slice of the cake. Given that the price coefficient for domestic copper concentrate was close to smelters' production cost in late 2020, the room for increase would be limited, and the best guess is that the overall price coefficient would inch up by 0.3-0.7 percentage points in 2021.

Asian Metal: Due to stricter environmental protection policy, many small-to-medium sized mines in China were forced to shut down or make major upgrades in recent years. Is there any impact on the production at your company's mine?

Mr. Yang: The strict environmental protection policies implemented nationwide did lead to the shutdown of a number of mining companies failing to meet standards, but the overall impact on us is relatively small. Dabaoshan Mining has been paying high attention to environmental protection since 2013 when it raised funds to build a heavy metal wastewater treatment plant with processing capacity of 60,000tpy, the then biggest one among domestic mining companies. Meanwhile, we also took the lead in reclamation and restoring vegetation. We came up with relevant plans in 2015 and then took phased measures, and we basically achieved the goal of turning mines green by 2020. We all know that vegetation can barely grow in acidic soil rich in heavy metals, but we chose to adopt new technology and achieved encouraging results.

Asian Metal: In H1 2020, copper price once fell below the production cost for most domestic mines. What measures did Dabaoshan Mining take, particularly in terms of production and sales, to cope with the situation?

Mr. Yang: The new management team of our company took office when the COVID-19 epidemic peaked in March. As copper price hit the bottom then, the Chairman of the board unveiled the basic policy of reducing cost and increasing efficiency and did a lot of work on controlling production cost. In accordance with market conditions and through negotiations with suppliers, the costs of medicament and spare part declined significantly. At the same time, through the strict control of inventory of the above-mentioned consumables, the costs had been effectively cut by the end of December.

Due to the slump in copper price in Q2 2020, we raised the price coefficient by 0.3 percentage points in June after talks and negotiations with smelters and traders. We also marked up the coefficient accordingly in August when gold and silver prices climbed up. Meanwhile, we were in active talks with clients to extend spot pricing period for some cargos, and managed to minimize the loss caused by the low copper price in H1 2020.

Asian Metal: Production and shipments of copper concentrate both at home and abroad have been greatly impacted by the COVID-19 pandemic and the global supply of copper concentrate remains relatively tight at the moment. What's your opinion on the global supply situation in 2021?

Mr. Yang: The worldwide COVID-19 situation remains grim now and it takes a long time to see actual results of the vaccine rollout, so there are still many uncertainties over the global production and shipments of copper concentrate in 2021 against the backdrop of uncurbed pandemic. Coupled with news about worker strikes at some overseas mines every now and then, the global supply of copper concentrate would still be relatively tight on the whole in 2021, and the price coefficient for Chinese copper concentrate is thus expected to edge up further. However, the tight supply would be alleviated to some extent as new expansion projects at some major overseas mines will commence production in the second half of 2021.

Asian Metal: Supported by multiple factors such as the quantitative easing implemented in many countries around the world and the tightening supply of copper raw materials, copper prices have been on the rise since hitting rock bottom in March 2020 and repeatedly set records. What’s your forecast on copper price trend in 2021?

Mr. Yang: According to public data, the whole copper industrial chain feels bullish on copper price in 2021 and we also take an optimistic view. It is known that copper has a relatively strong financial attribute. In the aftermath of the 2008 financial crisis, China announced a RMB4 trillion (USD586 billion) stimulus package and major European and American economies also resorted to quantitative easing to stimulate the economy, with copper price hitting the historical peak of about RMB80,000/t (USD10,204/t). After the outbreak of COVID-19 last year, major global economies implemented quantitative easing on an unprecedented scale in a bid to recover from the pandemic as soon as possible. Coupled with the substantial and sustained recovery expected in global economy and copper consumption after COVID-19 vaccines were licensed for use, I believe copper prices would have enough momentum to climb up in 2021.