Asian Metal: Thank you for granting us this interview Mr. Gao. Could you please give us an introduction to recent events at the company?

Gao: It’s an honor to be interviewed by Asian Metal. CMN has enhanced the industrial integration of the tungsten industry along with Hunan Nonferrous Metals Tungsten Co., Ltd, strengthening communication and cooperation, having achieved all of our company goals and realized business revenue of about RMB123.4 billion in 2014. The company will continue to push the integration of resources and structural optimization in 2015.

Asian Metal: The tungsten concentrate price has rebounded slightly since the start of January 2015, with the major mines reluctant to sell out, and the market supply restricted. Do you know the reasons for the price increase? How do you see the price level faring in the future?

Gao: In my opinion, as most mines stopped production at the end of 2014, the supply was reduced, the price had continued to decrease for the whole year, meeting the expectations of market participants at the end of 2014, and the rumor of national stockpiling enhanced the expectations of a price increase. Therefore, most suppliers were reluctant to sell out and increased prices.

There is still considerable uncertainty over the price trend in the future due to the unchanging relationship between supply and demand. There won’t be enough support for a price increase; however, if the stockpiling activity is carried out by the State Reserve Bureau, it may stimulate price increases within a certain period of time.

Asian Metal: China has abolished the export quotas for tungsten this year. Will this have any influence on the export market for tungsten products from China?

Gao: The removal of the export quotas will not have any influence on the export market for tungsten products in the short term. Before their removal, the total export quotas had been surplus every year, which means that the demand for the products from overseas countries was less than the total quota; therefore, the export quotas had no influence on the export volumes of China’s enterprises. If the export enterprises with state-run trade qualifications can enhance the industry’s self-regulation and do not compete aggressively by offering low prices, the removal of export quotas will not be a problem we should worry about.

Asian Metal: The export tariff on tungsten will be abolished in early May of 2015 as well; will this be an opportunity or a challenge for China’s export enterprises? Will the market structure see any changes in the future?

Gao: This will benefit tungsten export enterprises. The export prices may see a decline in the short term after the reduction of tariffs as the tariff which is added to the unit price should be reduced after the removal of the 5% tariff. But the price trend is determined by the demand from the overseas market in the long run. The removal of tariffs is expected to stimulate an increase in export volumes. With improvements to the competitiveness of products from China, the purchase cost for the overseas customers will be reduced accordingly.

Asian Metal: Do you know whether or not the domestic demand for tungsten improved in 2014 compared with the previous year, and whether overseas consumption has rebounded within the export market? And how is consumption looking vis-à-vis the export quota?

Gao: Demand in 2014 did not see significant improvements, being at nearly the same level as in 2013. As for the export market, the inventories of most enterprises in 2014 were at low levels due to the de-stocking of foreign cemented carbide enterprises in 2013; although the total capacity of the market did not see a great deal of change, the customers purchased more when compared with 2013. Consumption of the export quota for our company increased by about 60% in 2014, year-on-year.

Asian Metal: What are your thoughts on the tungsten market in Q2? Do you think the domestic and export markets will improve in the quarter?

Gao: As the supply from mines was unable to expand after the Chinese Spring Festival, the supply may remain tight and the price of tungsten concentrate may remain stable or move up slightly.

If there is no significant benefit for the domestic market in Q2, the tungsten concentrate price is expected to remain stable.

Asian Metal: Cemented carbide is the key downstream field of consumption for tungsten products. What are your thoughts on the development trend for cemented carbide in the future? Will your company continue the extension of the downstream industrial chain?

Gao: Domestic cemented carbide enterprises have developed rapidly in recent years, but huge room for growth in the product structure, industrial distribution and concentration ratio still exists when compared with the developed countries. The cemented carbide sector has been strengthened since the integration of CMN and Hunan Nonferrous Metals Corp., Ltd. Zhuzhou Cemented Carbide Group Co., Ltd., Zigong Cemented Carbide Corp., Ltd. and Nanchang Cemented Carbide Limited Liability are all well-known enterprises with a long history in the cemented carbide industry. CMN will integrate industrial structure further and put more investment into the field of cemented carbide R&D to maximize the overall benefits CMN brings to the tungsten industry.

Asian Metal: How do you see downstream demand and the key fields of application in the future? Does the company plan to lead the domestic tungsten market down a healthy development track?

Gao: Tungsten is known as the teeth of the industry and it is widely used in the mining, metal processing, aerospace, electronics and military fields. With economic development and the improvements in science and technology, the applications of tungsten will become more extensive. CMN will try to operate the tungsten industry effectively, meanwhile trying to enhance the cemented carbide R&D field and bring the additional value of tungsten resources, aiming to transform the resource superiority into an industrial advantage. CMN is willing to work and pull together with our domestic colleagues to achieve the development of our national industry.