Chinese calcined bauxite industry steps into a virtuous circle of development

Asian Metal: First of all, could you please make a brief introduction to your production status?

Mr. Fan: Covering an area of 2.4 million square meters, Shanxi Yangquan Taihu Refractory Material Co., Ltd., formerly known as Shanxi Yangquan Bauxite, is located in the east of Yangquan Economic and Technological Development Area with RMB180 million of fixed assets and 63 million tons of high-aluminum bauxite reserve. The development of refractory materials in our company has a history of more than 50 years and we are the largest state-owned enterprise in China that mainly engages in the production of high-aluminum bauxite and amorphous refractory. Items of business: high-aluminum bauxite and calcined bauxite, a complete range of specifications of processed bauxite products.

We own one rotary kiln of 200,000tpy-capacity and eight down-draft kilns of 300,000tpy-capacity with the annual capacity of calcined bauxite totaling 500,000t. We have been maintaining normal production as the rectification of our environmentally protective facilities has been qualified. At present, one rotary kiln production line whose monthly output is 20,000t is in operation and three processing production lines including ball grinding mill, double-roll and Barmac sand maker are in production.

Asian Metal: What do you think is the major reason for continuously increasing prices in bauxite market this year?

Mr. Fan: Prices in the bauxite market have been moving up continuously after the Spring Festival. In my opinion, the production costs increased as companies added new environmentally protective equipment; in addition, production costs of ore and fuel increased. As a result, prices in the bauxite market showed a continuous uptrend.

Asian Metal: What about your production and sales status by now in 2017?

Mr. Fan: Our monthly output is 20,000t, which is quite limited and cannot meet customers’ demand. Therefore, we have been maintaining production to the best of our abilities to guarantee stable supply for most customers.

Asian Metal: It is difficult for most companies to avoid punishment and shutdown under the condition of China’s comprehensive environmental protection inspection policy. I’d like to know how you dealt with the tough situation.

Mr. Fan: In accordance with the requirements of relative environmental protection administration, we updated our environmental protection equipment and built new warehouses in a timely manner. We could make sure that no dust would flow into the air by stocking all of the products in fully enclosed warehouses.

Asian Metal: In recent years, China has restricted mine exploitation and strengthened protection on mines, which led to tight supply of bauxite. As a bauxite producer, how do you look upon the raw material issue?

Mr. Fan: This year, China has been carrying out environmental protection inspections, raising barriers to enter the market; what’s more, the companies which cannot meet standards are eliminated. Thus, the market is regulated and outdated and excess capacity is certainly knocked out. It is worth mentioning that the terms of payment changed from debt and loan to payment in advance by cash. In this case, we producers bear less financial pressure and are able to withdraw funds more easily. In addition, some small-scale companies who conduct explorations without abiding by rules and regulations are weeded out to standardize mining and make better use of limited mineral resources. Furthermore, the companies with exploitation permit and production capacity are able to run orderly and participate in the market activities in a positive atmosphere.

Asian Metal: Do you think the raw material of calcined bauxite will rely on importing?

Mr. Fan: The market sees tighter raw material supply affected by restricted exploitation on bauxite in China. As far as I know, there are some domestic producers who consider importing bauxite containing high aluminum and low iron. If exploration is restricted further, it will be likely for producers to import bauxite.

Asian Metal: Last but not least, what’s your view on the current status and future trend of calcined bauxite market?

Mr. Fan: We are of the opinion that national environmental protection inspection will remain strict or be strengthened and rectifications on mines will carry on; therefore, survival of the fittest will dominate the calcined bauxite market under the current policy. That is to say, companies who meet standards with legitimate procedures can guarantee stable production and supply, their capacity will be more optimized and centralized, illegal mining and underselling of mineral resources will be regulated gradually, and the market atmosphere will be improved step by step.