Holding mineral resources makes us competitive

Asian Metal: Hello Mr. Liu, would please give us a brief introduction to your company?

Liu: Hello everyone. Our company is mainly engaged in the production and sales of alumina.

Asian Metal: How about your production in 2018?

Liu: We launched a new production line with a capacity of 600,000tpy in June. Our alumina output in 2018 was about 900,000t in total. In addition, we are aiming for about 1.3 million tons of output in 2019.

Asian Metal: What do you think is the main factor that influences the alumina price?

Liu: There are three major factors: Firstly, the bauxite price reached a record high in 2018 which led to continuous high costs for alumina production. Secondly, as the bauxite quality became lower, the unit consumption for caustic soda in alumina production rose up. Currently the caustic soda price counts for around 30% in the alumina production cost. The last is the strict environmental protection policy. Refineries all invested a lot in the environmental protection equipment to ensure that they meet emission standard, which makes the production cost even higher.

Asian Metal: Some aluminum smelters in Northwest China cut production in Q4 2018. Does it affect your sales?

Liu: We mainly sell our products to clients in Shaanxi, Xining and Inner Mongolia. Due to the stable quality and good recognition of our products, we are barely affected by the issue.

Asian Metal: Due to the tight domestic bauxite supply, some refineries in Shanxi and Henan are trying to consume imported bauxite. Do you think that it will be increasingly common for inland refineries to use imported bauxite?

Liu: Firstly, there is a large difference in the requirement to the production parameter between domestic and imported bauxite; Secondly, Shanxi owns abundant bauxite resources. Mining activities that compliance with regulations would hardly lead to the short supply after our government will complete reforming minerals industry in 2019, and thus bauxite prices would back to a reasonable level. Lastly, an issue must be considered is the high carriage cost from port to plant. In conclusion, I expect that it is difficult for inland alumina refineries to make extensive usage of imported bauxite.

Asian Metal: How does the strict environmental protection policy affect you?

Liu: Absolutely we are limited by the policy. We cannot reach the full production capacity in the heating season, which resulted in lower output.

Asian Metal: As we know, the current aluminum market is sluggish. What do you think is a good way for alumina enterprises to deal with the challenge?

Liu: In my opinion, alumina enterprises should strengthen management to ensure a lower cost and a higher efficiency. Besides, it is also very important to ensure mineral resources. We build refinery relying on bauxite mines, which makes us competitive regarding the raw materials supply and production costs control.

Asian Metal: How about your development plan in the future?

Liu: Supported by our local government, we will develop an aluminum-based industry park and welcome the investment and cooperation.