Asian Metal: Thank you very much for granting this interview. First of all, what is your take on the current macro-economic situation?

Pan: The global economy is still not in very good shape as the recovery has been slow since the financial crisis in 2009. As for China, the whole titanium industry, including titanium ore, titanium slag, titanium dioxide and titanium metal, keeps weak, and related industries like real estate is also struggling. More and more domestic producers halt production to avoid losses and oversupply, and the producers who do not suspend production are not able to operate at full capacity mainly due to weak demand.

Asian Metal: What is current status for Yunnan-based titanium enterprises amid current economy situations?

Pan: As a strategic resource, titanium is deemed as “the third metal” in the 21st century and is widely applied in aerospace, medical and chemical industries. However, titanium industry is attracting greater attention lately in Yunnan. There were only forty titanium ore producing enterprises with 300,000tpy of the output of titanium concentrate in Yunnan in 2003, but over 200 enterprises were engaged in mining and dressing titanium ore with 800,000tpy of the output of titanium concentrate by late 2010. Several large-scale production areas like Fumin, Lvquan, Wuding, Anning and Honghe have been founded with titanium products being sold to hundreds of domestic enterprises after over a decade of development.

However, current economic situation is bad, and most Yunnan-based titanium enterprises halt production and overhaul facilities, and almost every producer has one-two months’ output or even more in stocks. Anyhow, the provincial government is very concerned about the development of titanium industry and should announce and release related policies to help enterprises to walk out of difficulties as well as gain acceptance or popularity for Yunnan-based titanium products in China or even globally.

Asian Metal: Yunnan is developing titanium industry actively and trying to promote products all over the country, and what about import and export markets?

Pan: We also work hard in import and export markets. We held “Yunnan Titanium Industry Summit Forum 2013” in Kunming earlier this year and the first to bring highly regarded Australian mining company into Yunnan. We cooperate with one of the fourth Australian mineral company AIR to build a production base with 300,000tpy of titanium output and gained ten-year sales rights for titanium ore.

Additionally, we have also signed cooperate agreement with one of the largest domestic titanium ore importers, Hainan Wensheng Group to ship high-grade titanium ore from other countries to Yunnan, and we will try to enhance the quality of downstream titanium slag, titanium sponge and titanium dioxide to the high-end level to strengthen the competitiveness of Yunnan titanium industry.

Asian Metal: What leverage do Yunnan-based titanium enterprises have over others?

Pan: Firstly, Yunnan has abundant titanium ore reserves which are mainly rock ores including diabase weathered crust red clay ore in central Yunnan and southern Yunnan, fluvial outwash ore in Baoshan in western Yunnan and fluvial outwash integrated ore like zirconite and monazite ilmenite. Ores in central and southern Yunnan have been mainly developed with approved reserves of 7.6Mt, and abundant reserves translate to low costs.

Meanwhile, low labor costs in Yunnan also bring the advantages of high reserves and low costs, and competitive labor cost in Yunnan is made possible due to proximity to the populous Sichuan province.

Equally important is the support from the government. Our association is under the Committee of Industry and Information Technology of Yunnan, so the provincial government also pays great attention to titanium industry. Yunnan has drawn out the Twelfth-Year Plan and the admittance criterion of titanium industry, which is the first instance domestically. Our province will focus on building Chuxiong titanium industry base to promote cluster development of the industry and base construction in titanium industrial park, which will stabilize the sentiment for enterprises that will develop, create and innovate fearlessly for booming titanium industry.

Asian Metal: As you mentioned, titanium industry development has great advantages in Yunnan, but why titanium products have not been accepted and applied widely presently?

Pan: Actually speaking, titanium products in Yunnan are of good quality and with competitive prices, but one of the main challenges has to do with inadequate logistic services as we do experience transportation bottlenecks. As an inland or landlocked province, we can only transport products by railway with high freight, and for ocean shipping, we have to transport products to Kunming and then to Fangcheng port in Guangxi by railway with almost RMB230/t of freight, and products should be shipped from Fangcheng to other ports. For example, RMB450/t of freight will be paid for transporting one ton of titanium ore from Yunnan to Northeast China, which balances out the competitive prices in Yunnan or results in even higher figures. Hence, the freight is a great obstacle for titanium products in Yunnan.

Besides, titanium ore contains 3-4% of moisture, which is wet ore and has one additional packing expense than dry ore. Moisture will evaporate during transportation, thereby reducing the weight when the material reaches to the destination, which also restricts sales of titanium ore from Yunnan to other provinces.

Asian Metal: Current titanium industry is bad, what is your expectation for titanium industry in the second half of the year?

Pan: Economic situations are indeed depressing, so the whole titanium industry is unlikely to boom in the second half of the year.

However, we are very confident about the outlook of titanium industry in Yunnan as we have abundant resources required by global titanium enterprises. We also have advanced techniques, for example, Yunnan Xinli Titanium and Yunnan Copper & Titanium adopt the most advanced technology in the world with reasonable industrial structure. Furthermore, the support from the government also promotes the rapid development of Yunnan-based titanium enterprises. Finally, as a promising industry, advantages of titanium mean that the material will be applied more widely with expanding development room.

Asian Metal: Thanks for your support, and we wish Yunnan-based titanium enterprises develop further and reach for new height under the leadership of Yunnan Titanium Associations.

Pan: Thank you.